Had a customer request to give me a 1099 for work performed but I've never had that happen before. It's my understanding that 1099's are for contractors/sub-contractors which I am not. I sell a service (manufacturing) so I look at it like having the John Deere dealer come out and fix your tractor -- you don't 1099 them.
But maybe I'm wrong? Do you receive 1099's for milling?
Yup you can get 1099 for sure
I have been self employed since 1984 and have been 1099 a lot .
No big deal the IRS wants it done doing work for them for free
Was the customer a business owner or perhaps paid through his business?
D
A 1099 form issued by the company that hired you allows that company to take a deduction for service costs to them. The service that you provided cost them money and that is something they will deduct against their earnings when they file their taxes.
For you, the 1099 is considered income, which you report on your tax return as ordinary income. The IRS will be able to cross check this if you provided your Social Security number to the issuer of the 1099.
Yes and yes...I did some research and this is normal despite other businesses not doing so with me. I've sent him my UBI but may have to send my SSN which I hate to do frankly but if it's the way, it's the way.
I have had to furnish 1099 information before. Doesn't matter because I always remind/encourage my customers to show it is "farm lumber" anyway.
Quote from: OlJarhead on April 12, 2017, 09:31:55 PM
Yes and yes...I did some research and this is normal despite other businesses not doing so with me. I've sent him my UBI but may have to send my SSN which I hate to do frankly but if it's the way, it's the way.
To avoid having to give out my SSN I applied for an EIN and use that instead.
Gerald
I have and do get 1099's from snowplowing and saw milling. I have issued 1099's for contracted labor as well if its meets the dollar threshold.
The reason that companies who do work for you do not require a 1099 is because they give you an invoice. To avoid the 1099 trap, get a stack of invoices printed up. When a job is completed, fill one out detailing your charges, then give it to the customer. This gives the customer a paper trail for the deduction they will claim as an expense. The invoice should identify you or your business, have a date, and specify the customer by name. Regards, Clark
Quote from: sealark37 on April 13, 2017, 08:02:33 AM
The reason that companies who do work for you do not require a 1099 is because they give you an invoice. To avoid the 1099 trap, get a stack of invoices printed up. When a job is completed, fill one out detailing your charges, then give it to the customer. This gives the customer a paper trail for the deduction they will claim as an expense. The invoice should identify you or your business, have a date, and specify the customer by name. Regards, Clark
Hmmmm I give every customer an invoice with 'PAID' on it after every job once paid.
If I remember right a 1099 isn't required on amounts less than $600. They're done all the time for custom work on farms....Get yourself an EIN so you don't have to give out SS#. It's easy to do online in about 10 min.
There is a specific list of questions to answer in order to be considered a subcontractor. One wrong answer and the guy paying you must pay all applicable taxes and compensation. My guess is he lost in a compensation audit and does not want to loose again. Simply filling out for 1099 does not help in his case I don't think.
Your only 1099'd if you don't have a business and your accepting payments in your personal name.
If you own "Bob's sawmill inc." and that's what your customer made the checks out to, you don't need to give them a 1099. If anything you'd fill out a W9 form, but that's not even necessary if your incorporation type is included on the check (.inc, llc, etc.)
If your selling materials an invoice should suffice. IRS doesn't require 1099 for purchases to individuals, think Craigslist, eBay, etc.
Also, 1099 can get people in trouble because that implies they were doing labor, which would mean payroll taxes, workers comp, etc. would need to be payed, even when self employed!!
You shouldn't be accepting any money personally as it could get you in hot water with the IRS. And you'd be limiting your business deductions.
Worked 26 years as a tax auditor and then audit group manager. Sawmilling someone's else's lumber technically, if the bill was $600 or more, is a labor service that requires a 1099 misc if the person you sawed for is writing off the expense on their taxes.
It doesn't matter if it's you personally or you have a llc or corporation set up. Doesn't matter if you give them an invoice or not. D6c is correct if you are leery about giving your SSN out then get an EIN.
If you sell lumber that you secured the logs, sawed and then sold as a product to a customer you don't need to give out your SSN or EIN as a 1099 misc would not be required.
I get people and companies wanting the 1099 all the time. The attitude is better to have and not need, then to need and not have. More important to me is getting the form filled out that relieves the buyer from paying sales tax. If you are supposed to collect sales tax, you better have those forms or prove you shipped out of state.
There is a W-9 form on the IRS site that you can complete, save and print-out when needed for this purpose. Be sure to print only the first page or you'll be printing a few extra pages that aren't needed (just instructions). I agree that you might want to consider incorporating in some fashion. Companies/individuals wanting to take the expense of you providing services to them need to have your tax information on file.
Quote from: OlJarhead on April 12, 2017, 09:31:55 PM
I've sent him my UBI but may have to send my SSN which I hate to do frankly but if it's the way, it's the way.
If you have an UBI in our state and are an LLC then you had to give the state your EIN to incorporate.
If you are running as a sole proprietor without the structure of an LLC then your UBI was most likely issued to you and thus your SSN.
To form an LLC is very easy in our state.
Think it cost either $180 paper file or $200 online (quicker).
Getting an EIN for your LLC is VERY easy. Think 10 minutes, at most.
In today's fraud world I would NEVER give out my SSN. That is the beauty of the benefits of the EIN and the LLC among others.
There is no free lunch in being in business :)
I never liked the 1099's. I don't mill wood, yet, but my favorite kind of customer is the one who shows up with a fist full of $100 bills and we make the exchange and seal it with a handshake no IRS involved. I understand the 1099, but there has to be a way around it. Buy their logs from them for $1, then sell them back to them for $.35 bdft. The money uncle sam doesn't know has more value than the money he knows about.
Gotta love Benjamin's