For that purpose, in the future you might want to have that foreign worker fill out, sign and return to you Form W-8BEN.ĭon't ignore the 1099 or the process and even if you miss the first deadline of January 31, get with your CPA and make sure to finish up the process before the end of March. citizen, and performed all work outside the United States. It is your responsibility to verify that the worker is indeed a non-U.S. citizen who performs any work inside the United States, you would need to file the 1099. What about foreign workers? Also, if you hire a non-U.S. Using this as a normal business practice will give you the vendor's mailing information, Tax ID number, and also require the vendor indicate if it is a corporation or not (saving you the headache of sending them a 1099 next year). The W-9 is your "best friend." One of the smartest procedures a business owner can implement is to request a W-9 from any vendor you expect to pay more than $600 before you pay them. Ironically, the government doesn't trust that lawyers will report all of their income, so even if your lawyer is 'incorporated,' you are still required to send them a Form 1099 if you paid them more than $600. Additionally, you don't need to send 1099s to sellers of merchandise, freight, storage or similar items. What are the exceptions? The list is fairly lengthy, but the most common is that you don't need to send a 1099 to corporations or for payments of rent to real estate agents (typically property managers - yet they are required to send them to the property owners). If a business intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $250 per statement, with no maximum. What are the penalities? The penalties for not doing so can vary from $30 to $100 per form ($1.5 million for the year), depending on how long past the deadline the company issues the form.
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