1099 contractors

[Bill W]

Do I have to 1099 every contractor I use on a flip, or is my check receipt all I need.

[Steve Babiak]

Some misinformation in posts above mine. I am not a CPA or accountant, so check with yours. (But some of them don't know this stuff either!)

$600 is the correct limit for 2010.

For tax year 2010, only corporations are not required to be sent a 1099 - those would have inc at the end of their name. And for 2011, even the Inc's that you deal with will have to be issued these 1099s. Other entities get 1099s for both 2010 and 2011 tax years.

The deadline to send a 1099 is always last day of January in the calendar year that follows end of the tax year being reported (if last day falls on weekend or holiday, then usually it will be a day in February for the deadline). So for tax year 2010, you will send the 1099 in January of 2011.

Getting the W9 filled in can be difficult if you already paid the contractor; just make a request for them to fill out the W9. If they don't, you still send the 1099 out, but it will be missing some info important to the IRS. IRS will send you a letter to not do that again in your first time doing that, and to send a letter to that contractor that you will be required to get their tax ID before doing any further business with them. They will either fill in the form then, or you will stop giving them business.

Also, keep in mind that the W9 form serves another purpose as well. It states the the person giving you the W9 is exempt from backup withholding; otherwise you are required to withhold 28% (if I'm not mistaken) to be sent to the IRS.