Do Nonprofits Need to Issue 1099s?
A nonprofit organization has the same responsibility as a business when it comes to issuing 1099 information forms. For most nonprofits the primary concern is Form 1099-MISC, which is required every time you pay $600 or more during the year to non-employees for services. This could include fees you pay consultants, temporary labor or even the plumber. The only exceptions are payments to incorporated businesses and certain limited liability companies, unless the payment was for attorney's fees.
The 1099 filing requirement kicks in when your total payments to one person or business during the entire year reach $600. Even if your payment covers the costs of parts or supplies related to the service, the entire amount should be included toward the total. For example, if you buy $600 in cleaning supplies from the local store you do not have to issue a 1099. But if you pay a cleaning service to maintain your building, and they charge you for cleaning supplies, you must report the cost of the supplies as well as the service. There are several other instances when a 1099-MISC is required. These include the payment of rents, prizes and awards, and medical and health care payments.
With certain exceptions, you have to issue 1099s only to individuals, sole proprietorships and partnerships. You do not have to issue 1099s to corporations or to LLCs that have elected to be treated as a corporation, with two major exceptions. You have to issue 1099s to corporations if you pay legal fees or medical and health care payments of at least $600.
To issue a 1099 you will need the recipient's legal name, address and taxpayer identification number. In most cases you can simply ask for this information at the time of payment. You also can send recipients a Form W-9 asking for their information, and they are required by law to supply it. For most self-employed individuals and small business owners, the TIN will be their Social Security number. You may also use a company's employment identification number.
You have until Jan. 31 to mail a copy of the 1099 to each individual or business that has received reportable payments. You also must mail copies of the 1099s to the Internal Revenue Service by Feb. 31, or April 1 if you send them electronically. If you issue 250 or more 1099s or other information returns such as W-2s, you must file them electronically.
In 2010 Congress passed a law requiring that all payments of at least $600 be reported on a 1099, even payments for supplies or payments to a corporation. However, these new requirements were cancelled the next year before they took effect.
The are many other types of 1099s besides the 1099-MISC, but they generally apply to for-profit businesses. If your organization issues low-interest loans, you may need to issue a Form 1099-INT to report interest you collect, or a 1099-C to report any cancellation of debt.