1 Form 1099 Instructions and General Discussion

2017 New Mexico Association of Counties Annual Conference Chip Low, CPA CGMA Lea County Finance Director (o) 575-396-8653 (c) 575-704-6500 clow@leacounty.net

2 General I.R.S. Guidance

2017 General Instructions for Certain Information Returns 2017 Instructions for Form 1099-MISC This information is available on www.irs.gov.

http://www.irs.gov/

3 Types of Form 1099

1099 A Acquisition or Abandonment of Secured Property 1099 B Proceeds from Broker and Barter Exchange Transactions 1099 C Cancellation of Debt 1099 CAP Changes in Corporate Control and Capital Structure 1099 DIV Dividends and Distributions 1099 G Certain Government Payments 1099 INT Interest Income 1099 K Payment Card and Third Party Network Transactions 1099 LTC Long-Term Care and Accelerated Death Benefits 1099 MISC Miscellaneous Income 1099 OID Original Issue Discount 1099 PATR Taxable Distributions Received From Cooperatives 1099 Q Payments from Qualified Education Programs 1099 QA Distribution from ABLE Accounts 1099 R Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, etc. 1099 S Proceeds from Real Estate Transactions 1099 SA Distributions from an HSA, Archer MSA, or Medicare Advantage MSA

4 Form 1099 MISC Due Dates to Recipients

If reporting Non-employee compensation payments (box 7) the due date to the recipient is on or before January 31, 2018. If reporting Substitute payments in lieu of dividends or interests (box 8) or Gross proceeds paid to an attorney (box 14) the due date to the recipient is February 15, 2018. For all other reported payments the due date to the recipient is January 31, 2018.

5 Form 1099 MISC IRS Filing Dates

The Form 1096 along with copies of the Form 1099s are due to the IRS by February 28, 2018, if you file on paper, or April 2, 2018, if you file electronically. If any payments for Nonemployee compensation are reported in box 7, the due date is January 31, 2018, for both paper and electronic returns. Form 8809 may used to request an initial or additional extension of time to file only the forms shown in line 6 for the current tax year. Line 6 includes both Form 1099 and 1099-MISC NEC reporting only. The due date of the Form 8809 is January 31, 2018, if there is Nonemployee compensation and all other Form 1099 payments is February 28, 2018, if on paper, and March 31, 2018, if electronically.

6 Form 1099 MISC Payments to be Reported

The following are examples of payments to be reported on Form 1099-MISC: Attorney, fee and gross proceeds Health Care Services Auto reimbursements, nonemployee Indian gaming profits paid to tribal members Bonuses, nonemployee Medical services Car expense, nonemployee Mileage, nonemployee Commissions, nonemployee Nonemployee compensation Compensation, nonemployee Nonqualified deferred compensation, nonemployee Crop insurance proceeds Prizes, nonemployee Damages Punitive damages Direct sales of consumer products for resale Rents Directors fees Royalties Fees, nonemployee Substitute payments in lieu of dividends Fishing boat crew members proceeds Vacation allowance, nonemployee Fish purchase for cash Golden parachute, nonemployee

7 Form 1099 MISC Payments to be Reported

Payments made by federal, state, or local government agencies are reportable with exceptions: Payments to a corporation including an LLC that is treated as a C or S corporation.

However, the following payments made to corporations generally must be included, medical and health care payments (box 6), fish purchases (box 7), Attorneys fees (box 7), gross proceeds paid to an attorney (box 14), substitute payments in lieu of dividends (box 8).

Payments for merchandise, telegrams, telephone, freight, storage, and similar items.

Payments of rent to real estate agents. The real estate agent must use Form 1099-MISC to report the rent paid over to the property owner.

Payments to a tax-exempt organization, the United States, or a state.

8 Form 1099 MISC Payments to be Reported

Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity and are not subject to reporting on Form 1099-MISC. A payment to an informer as an award, fee, or reward for information about criminal activity does not have to be reported if the payment is made by a federal, state, or local government agency. Payments to Attorneys The term attorney includes a law firm or other provider of legal services. Attorneys fees of $600 or more paid in the course of your trade or business are reportable. They will either be entered in box 7 or box 14 depending on the character of the payment: Payments for services provided to the county are entered in box 7. Payments for settlement agreements are entered into box 14.

The exemption from reporting payments made to corporations does not apply to payments made for legal services.

9 Form 1099 MISC Payments to be Reported

If an employee dies during the year, you must report the accrued wages, vacation pay, and other compensation paid after the date of death. If you made the payment in the same year the employee died, you must withhold social security and Medicare taxes on the payment and report them only as social security and Medicare wages on the employees Form W-2 to ensure that proper social security and Medicare credit is received. If you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes. Whether the payment is made in the year of death or after the year of death, you also must report the payment to the estate or beneficiary on Form 1099-MISC. Report the payment in box 3 rather than box 7.

10 Form 1099 MISC Box 1 - Rents

Enter amounts of $600 or more for all types of rents, such as the following: Real estate rentals paid for office space. However, you do not have to report these payments

on Form 1099-MISC if you paid them to a real estate agent.

Machine rentals (for example, renting a maintainer to blade roads). If the machine rental is part of a contract that includes both the use of the machine and the operator, prorate the rental between the rent of the machine (box 1) and the operators charge (box 7).

Land rentals (parking lots, etc.).

11 Form 1099 MISC Box 2 - Royalties

Enter gross royalty payments (or similar amounts) of $10 or more. Report royalties from oil, gas, or other mineral properties before reduction for severance and other taxes that may have been withheld and paid. Surface royalties should be reported in box 1.

12 Form 1099 MISC Box 3 Other Income

Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form. Also enter into box 3 prizes and awards that are not for services performed. Do not include prizes and awards paid to your employees. Report these on Form W-2. Prizes and awards for services performed by nonemployees, such as an award for the top commission salesperson should be reported in box 7. Also report in box 3 all punitive damages, any damage for nonphysical injuries or sickness, and any other taxable damages. Report all compensatory damages for nonphysical injuries or sickness, such as employment discrimination or defamation.

13 Form 1099 MISC Box 4 FIT Withheld

Enter backup withholding. For example, persons who have not furnished their TINs to you are subject to withholding on payments required to be reported in boxes 1, 2, 3, 5, 6, 7, 8, 10, and 14 with exceptions.

14 Form 1099 MISC Box 6 Medical & Health Care Payments

Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If the payment is made to a corporation, list the corporation as the recipient rather than the individual providing the service. Reporting is not required for payments to pharmacies for prescription drugs. The exemption from issuing Form 1099-MISC to corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations. The exemption does apply to payments made to a tax-exempt hospital or extended care facility owned and operated by the United States, a state, the District of Columbia, or any other of their political subdivisions, agencies, or instrumentalities.

15 Form 1099 MISC Box 7 Nonemployee Compensation

Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. What is nonemployee compensation? If the following conditions are met, you must generally report a payment as nonemployee compensation: You made the payment to someone who is not your employee. You made the payment for services in the course of your trade or business (including

governments). You made the payment to an individual, partnership, estate, or, in some cases, a corporation. You made payments to the payee of at least $600 during the year.

16 Form 1099 MISC