What is in this article?:
- Tax Tips: Not All Farm Payments Require a 1099
- Reporting Requirements
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Reporting Requirements
Payments shown on Form 1099-MISC are generally not subject to FICA. If the party receiving payment does not provide the farmer with a valid social security number, the farmer is required to withhold 28% of the payment in the form of “backup withholding” for income tax. The income tax is subsequently reported and paid to the IRS using Form 945, Annual Return of Withheld Federal Income Tax.
If a contractor who is not a dealer in supplies performs a service and also provides the supplies required, the farmer must report the entire payment for supplies and services on the Form 1099 that is prepared for the contractor.
Forms 1099-MISC must be prepared and forwarded to each person to whom $600 or more was paid during 2011 by Jan. 31, 2012. The Form 1099-MISC information must be forwarded to the IRS by Feb. 28, 2012. Recently, penalties have increased for late Forms 1099-MISC or for necessary Forms 1099-MISC that were not issued. Therefore, it is essential for the farmer to ensure compliance with these Form 1099-MISC reporting rules.
