A 1099 is an “information filing form” used to report non-salary income to the IRS for federal income tax purposes. The IRS requires that all 1099’s be submitted by January 31st, 2021.
As a nonprofit organization, you are responsible for issuing a Form 1099 to any individual (person who is running a business and not incorporated – “independent contractors”) or LLC/LLP that your organization made payments of $600 or more to during each calendar year. Form 1099’s must be provided to the payees (vendors you paid) by January 31 of each year. Failure by your organization to furnish a correct Form 1099 by the due date is subject to a penalty.
Examples of vendors who might fall into the 1099 category:
Payments made to any other type of entity (Nonprofit, S-Corporation, C-Corporation etc.) do not require you to issue a Form 1099. Additionally, reimbursements to individuals for covered expenses do NOT require a 1099 to be issued.
If you do not know what type of entity the business you are working with is, you would need to research the company/person (look at their website, call them and ask etc.), or issue them a W-9.
It can be difficult to gather information from vendors at the end of the year. Therefore, we recommend having your vendors fill out a W-9 BEFORE issuing your first payment of the year. A form W-9 will gather all of the needed information (Name, Address, and Social Security Number) from the vendor for a 1099 to be issued.
Request that they fill out boxes 1, 2, 3, 5, 6, Part I (the important one), and Part II (Signature and Date)
The IRS’s due date for 1099 filings, January 31, 2021, is approaching fast. If you have any questions about your organization’s 1099 obligations, or would like some assistance preparing your filings, please do not hesitate to reach out!