Michigan Tech is required to file Form 1099-MISC for each calendar year, for the following items:
- Royalties: $10 or above—Box 2
- Rents: $600 or above—Box 1
- Prizes or Awards: $600 or above—Box 3
- Non-Employee Compensation (parts/materials and services): $600 or above—Box 7
- Direct Sales: $5000 or above—Box 9
- Medical or Health Care Payments: $600 or above—Box 6
- Attorneys (professional services)—Box 7
- Attorneys (proceeds/damages)—Box 14
- Deceased Employees Beneficiary: Other Income—Box 3
These examples may include individuals, sole proprietors, partnerships (including LLC, LLP), or d/b/a businesses.
- Exceptions include:
- Generally, payments to corporations with some exceptions
- Payments for goods and merchandise only
- Awards and/or Wages paid to employee—Should be reported on W-2
- Business travel allowances or reimbursements—Accountable plan (need receipts)
- Scholarships/Grants/Fellowships for US residents
- Tax-exempt organizations
- Governmental agencies
- Nonresident Aliens—Should be reported on 1042-S
- Examples of services include all services performed (including parts and service), honorariums, director’s fees, guest lecturers, commissions, performances, entertainment, accountants, architects, etc. This may even include payments for meetings, catering, printing, copying, software, fabrication, etc.
- We may be assessed penalties for the following:
- Incorrect Taxpayer Identifications Numbers (TIN)
- Failure to issue 1099 when required
- Incorrect amount(s) on 1099
- Failure to back-up withholding for incorrect TIN: 28%
- Collection of W-9 Form from all potential vendors in which a Form 1099-MISC may be required.
- Form 1099-MISC will be sent to all recipients by January 31.