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1099 MISC forms Q&A for commission paid?

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Ah, the first of the year and time to think TAXES!  Brokers/brokerages must issue and file a 1099 MISC for each person paid at least $600 during the previous year. Remember you pay the broker of record in cooperative sales, not the agent!  Below are the most frequently asked questions we receive about filing 1099s.

Do we need to file a 1099 for a CORP? 

  • You DO NOT have to issue a 1099 MISC to a corporation.

Do we need to file a 1099 to an LLC?  It depends on how the LLC is taxed. 

  • You DO NOT have to issue a 1099 MISC to a LLC that has elected to be taxed as a corporation (C or S corp).
  • You DO need to issue a 1099 MISC if the LLC was setup as a single member or partnership that did not elect to be taxed as a  corporation.

How do you tell if a broker operates as a sole proprietor, partnership, LLC or Corp?

  • All LLC’s and INCs are required to indicate that status in their company name, and should be listed that way in the MLS.  If there is no indication you can assume the company is a sole proprietorship or partnership and submit the required 1099.  Also, look at the completed W-9 you should have received when issuing the commission.  Businesses who pay service providers are required to obtain the W-9 before submitting the year end 1099 reports. That form indicates how the LLC entity should be taxed (C or S corp).

When must I file?

  • January 31.  The  IRS has moved up the filing date for Forms 1099-MISC reporting non-employee compensation.  The reporting date to the IRS will now be the same as the due date for the forms to be issued to recipients, January 31. This deadline applies regardless of whether the forms are filed electronically or on paper. In the past, filers had an extra month or two after issuing the forms to recipients, but no longer. Note, however, that the filing dates remain unchanged for Forms 1099-MISC that do not report in box 7.

REMEMBER THIS GREAT ADVICE FROM OUR ACCOUNTANT:

“It never hurts to issue a 1099, or to receive one, even if it is not needed.  The trouble lies when you don’t issue a 1099 when you should.”