1099s for corporations and other 1099 surprises

Are you wondering what 1099 is all about? Let us explain. Businesses making payments of $600 and above from their business accounts for service must send the individual a Form 1099-NEC and file a copy with the IRS.

Fees for professional services paid to attorneys, physicians and members of other professions must be reported in returns of information (1099s) if paid by persons engaged in a trade or business and paid in the course of such trade or business.

Now, the shocking news: This includes payments to medical and legal corporations. For the other professionals and service providers, you send 1099s to individuals, not corporations.

1099-NEC or 1066-MISC

Takeaways

Lawyers operating as corporations: Let’s start with the corporate attorneys and law firms:

Use Form 1099-NEC to report fees for legal services
Use Form 1099-MISC to report settlement fees

Medical operating as a corporation: Form 1099-MISC can be used for payments to corporations engaged in providing medical and health care services or in billing and collecting payments related to the provision of medical and health care services.

Veterinarian operating as a corporation: Payments made by a taxpayer during the course of the taxpayer’s trade or business to an incorporated veterinarian must be reported to the IRS to the extent the payments aggregate $600 or more per year. Incorporated veterinarians are not exempted from the reporting requirements because veterinarians provide medical and healthcare services.

Incorporated hospitals and extended care facilities: There is no need to report when the payment is made to a hospital or extended care facility as described in Section 501(c)(3) that is exempt from taxation under Section 501(a), or to a hospital or extended care facility owned and operated by the United States; a state the District of Columbia; a possession of the United States; or a political subdivision, agency or instrumentality of any of the foregoing.

Fish: You can also use Form 1099-MISC to report cash payments to corporations to purchase fish or other aquatic life for resale.