In reading the IRS rules, its sounds as though, unless they are incorporated, I should be giving all of my service providers 1099’s. (If they have done over $600 worth of work for me in one year.) I am an individual, not a business. I have never done this, nor has anyone ever asked me to give them this form. Have you?
I do not and have never.
Businesses issue 1099 forms, not individuals.
“You only need to send 1099s related to profit-making activities, not household or personal services. For instance, if you hire professional carpet cleaners for your office or rental unit, you will file Form 1099. But you won’t send one to the self-employed housekeeper who services your private living spaces.”
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As others above have said, nope because I’m not a business. A good friend of mine is a trainer and she issues them to her service providers, always has. She had one (a farrier) who reacted badly when she gave him one. He said something along the lines of he’d been giving her a great deal on his services, how could she do this, etc. etc.
She informed him that, as a business, she had to do this or risk losing her livelihood/farm should the IRS decide she was not playing ball. She also said she’d be fine if he felt the need to raise his prices (for her) if he hadn’t factored in taxes. I believe that is what he wound up doing and the arrangement stayed until she left that state.
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Farriers are usually considered “contractors.” None I know are issued 1099s. Even by big farms. Taxes are the Farrier’s own business. They should be paying their taxes quarterly on ESTIMATED income, before a quarter starts. I can see why Farrier got upset, probably threw his accountant into a tizzy!! Much stuff to refile, refigure on the numbers.
Husband the Farrier told one customer that he would quit them if they issued any forms related to him!! That was a BIG account, 40+ horses so he was out there one day a week. Clients there with horses got irate, they did not want to lose husband as Farrier, so the new person managing money backed down. They just issued him checks after that, same as previous money manger there. Husband and his accountant kept things straight, never had any IRS questions or problems on his taxes.
If Farrier is not filing taxes, he/she is a fool. Twice foolish if not paying into Social Security on money earned. Can’t draw SS, use Medicare, if you never pay in for when you get old or get broken. We have seen people he used to work with in barns, now aged, crippled up folks on Welfare, food stamps. Makes you feel terrible for them.
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That’s not true.
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Ridge Not current on taxing income, but that was what I was told “back then.” Thanks for the correction. Changed my post to remove your quote.
“Contractors” are SPECIFICALY the ones for whom 1099s (specifically 1099 NEC = Non Employee Compensation) are supposed to be issued (when the payer has TIN instead of a SS#)
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My SO is a farrier.
He gets 1099’d by some of his larger ranches & training facilities, but one of his biggest barns never 1099s him. I think it all just depends on your accountant & tax situation.
An individual has never 1099’d him though.
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Respectfully, if contractors are paying their taxes properly, being issued a 1099 won’t affect them at all. They just file the 1099.
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I pay our farrier in cash for the most part. What he does with it beyond that is none of my business :-).
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See? This is what I mean! The IRS says that 1099’s ARE for independent contractors (non employees). And it doesn’t say that only businesses have to do it. I find it bizarre that they have this law, hardly anyone follows it, but it’s not enforced. Don’t they eventually ask the tax filers to show proof of their income? Otherwise, they can claim anything, and avoid taxes. I’m well aware that they have to file estimated taxes, but at the end of the year, it’s no longer estimated–you show proof of the income, and any discrepancies are cleared up. (This is what I do.) I also mentioned this is a farrier once, but got the same upset reaction. I would guess he’s paying little in taxes.
We issue 1099s to independent contractors whose services we use in our business. Here are the IRS rules:
We paid our farrier in cash, too. Sometimes we would tip him with fly spray when the store in his area would be out of it or he hadn’t had time to go buy some. We did some kind of deal with him that involved an inflatable boat and 9.9 horsepower motor that we were no longer using. I’m sure no cash changed hands in that one; he probably did a set number of trims to pay us for it. He was a good guy and my horses loved him.
Rebecca
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Yes, Jarpur. That rule involves businesses. I’m trying to find out if individuals have to do it. I’m going to check with my accountant (probably should have done that in the first place!)
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No, individuals do not have to file a 1099. Besides my farrier and vet, I have a cleaning lady, paid several guys to rehab my house, pay a plumber, etc etc. It would never occur to me to issue a 1099 - they are the business and it’s up to them to figure out their own taxes on the revenue they earn. And if they under-report their revenue and get audited, well, that’s their problem, not mine!
Now, when I was an independent contractor/sole practitioner, the companies I worked for did issue 1099s for me, but that was a business-to-business relationship.
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IRS document
says
You are not required to file information return(s) if any of the following situations apply:
- You are not engaged in a trade or business.
- You are engaged in a trade or business and
- the payment was made to another business that is incorporated, but was not for medical or legal services or
- the sum of all payments made to the person or unincorporated business is less than $600 in one tax year
(1099s are “information returns”)
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Thank you for this, should settle the issue.
But it probably won’t. 
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Yes, this was exactly my point when I posted the link, and stated that we issue 1099s for our business (which I underlined). I thought that people would use the link, and read the official statement you’ve highlighted.
