I must give a 1099 to a corporation? Are you kidding me?
You may be surprised by this headline, thinking, What? I must do 1099s for corporations? Are you kidding me? No, we’re not kidding. It’s only certain corporations, but still—this may be a shock.
As you know, when your business makes payments of $600 or more from your business accounts to a person for services, you must send that individual a Form 1099-NEC and also file a copy with the IRS.
Fees for professional services paid to attorneys, physicians, and members of other professions are required to be reported in returns of information (1099s) if paid by persons engaged in a trade or business and paid in the course of such trade or business.
But here’s the shock: This includes payments to medical and legal corporations. For the other professionals and service providers, you send 1099s to individuals, not corporations.
1099s for Corporations: 1099-NEC or 1099-MISC
Lawyers operating as corporations. Let’s start with the corporate attorneys and law firms:
Medical operating as a corporation. Use Form 1099-MISC for payments to a corporation engaged in providing medical and health care services or engaged in the billing and collecting of payments related to the providing of medical and health care services.
Veterinarian operating as a corporation. Payments made by a taxpayer in the course of the taxpayer’s trade or business to an incorporated veterinarian must be reported to the IRS to the extent the payments aggregate $600 or more per year. Incorporated veterinarians are not exempted from the reporting requirement because veterinarians are “engaged in providing medical and healthcare services.”
Incorporated hospitals and extended care facilities. No reporting is required where payment is made to a hospital or extended care facility described in Section 501(c)(3) that is exempt from taxation under Section 501(a), or to a hospital or extended care facility owned and operated by the United States; a state; the District of Columbia; a possession of the United States; or a political subdivision, agency, or instrumentality of any of the foregoing.
Fish. You also use Form 1099-MISC to report cash payments to corporations for the purchase of fish (and other aquatic life) for resale.
Small Business Tax Services
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