John Bullis: Verify the forms 1099-MISC you receive
January 19, 2019
You know that everyone makes some mistakes. If you receive an IRS Form 1099-MISC (for miscellaneous) it is important to be sure it is correct. If the form is not correct, contact the person that issued it and ask for a corrected form.
For example, we have seen some instances when a real estate salesperson received a form 1099-MISC that did not correctly report the commissions that were paid to the salesperson.
We urge clients to keep their own records of what they are paid so they can verify if the form correctly reports the income.
If you receive a 2018 form 1099-MISC, please be sure it is correct. Take your information to the firm that issued the form and find out why it does not seem to be correct.
The issuer might be able to explain how they determined the taxable amount. If the issuer made a mistake, they can do a corrected form. They need to send the corrected form to IRS as soon as possible. And, of course, they will give you a copy of the corrected form so you can do your tax return correctly.
IRS records those forms in their computer's database. It is possible to get a transcript from IRS that shows what they received for those forms. The "Wage and Income" transcript can be helpful in being sure you know what IRS has for your income. Just like most IRS forms, there are detailed instructions for form 1099-MISC. The instructions show who must file, what is to be reported and what is not required to be reported.
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Page 2 of the instructions for that form explain about required forms for payments to attorneys. If the total is $600 or more for the year, perhaps a form 1099-MISC should be prepared and filed with IRS and a copy sent to the attorney.
Usually payments to a corporation or an LLC that is taxed as an S or C corporation do not need to be listed on form 1099-MISC. However, for attorneys, that exemption does not apply. Payments to corporations for legal services are to be reported in box 7 for fees paid to attorneys or box 14 for gross proceeds (in case of a settlement, etc).
The issuer (one who paid the proceeds) will need the Social Security number (or in case of a corporation that provides legal services the Employer Identification Number-EIN) and the address to be able to file a correct form 1099-MISC. Maybe you should start a file that has that information for your 2019 payments to independent contractors, attorneys, etc.
Did you hear, "The third day of a diet is the easiest. By that time you are off of it."
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.