If you don’t collect new W-9 from vendor’s regularly, you should start collecting them now.

A W-9 has all the relevant information to determine if you need to or not issue a 1099-M or 1099-Nec to your vendor.

The IRS requires businesses to report payment of nonemployee compensation of $600 or more on Form 1099-NEC instead of on Form 1099-MISC. Businesses also need to file Form 1099-NEC if the business withholds federal income tax from a nonemployee’s compensation, regardless of the amount of the payment.

Form 1099-MISC must be issued  to each person to whom you have paid during the year:

  • At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
  • At least $600 in:
    • Rents.
    • Prizes and awards.
    • Other income payments.
    • Medical and health care payments.
    • Crop insurance proceeds.
    • Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
    • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
    • Payments to an attorney.
    • Any fishing boat proceeds.

In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

So, make sure you have recent W-9’s on file for all vendors.

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