When Is the Vendor Eligible for 1099?

Businesses hire vendors to supply services or goods such as freelance services, consulting or merchandise. These individuals and businesses are not employees of the company and do not receive employment benefits. For that reason, an employer does not withhold any or all taxes or insurance from the payments given to the vendors; it is the vendor's responsibility to pay them. At the end of the tax season, the business is responsible for sending the vendor a 1099 form to report to the Internal Revenue Service, or IRS, any earnings made from the business.

North Carolina Tax Extension

Vendor Eligibility

A 1099 recipient is an individual person, a sole proprietor, a business partnership or other providers of service. These recipients may receive a 1099-MISC, 1099-INT or 1099-G. A company is responsible for sending each vendor the appropriate form during the following tax year for services or goods for the previous year. A company also has the responsibility of filling out IRS Form 1096 and sending it to the IRS. This form notifies the IRS of these payments and the responsibility of the vendor paying taxes on the payments. During this time, a company must have an accurate Federal Identification Number or Social Security number to issue a 1099 form or else the company may incur penalties.

North Dakota Tax Extension

IRS Form 1099-MISC

Companies will use IRS Form 1099-MISC to any vendor that received at least $600 for services or goods during the previous tax year, at the time of publication. Additionally, any vendor in which the company withheld federal tax for will receive a 1099-MISC. For example, company A provided you with $735 worth of material to build your product and is eligible to receive a 1099-MISC. On the other hand, company B only provided $535 for materials and will not receive a 1099-MISC unless the company withheld federal tax on the payment. Brokers who receive at least $10 instead of receiving dividends or interest will also receive a 1099-MISC.

IRS Form 1099-INT

Businesses use IRS Form 1099-INT on payments of $10 or more in interest, domestic or foreign, or when withholding federal income tax for a vendor. For example, if a business purchases an item or service on credit and pays a percentage rate, the vendor would receive a 1099-INT for any interest paid to him over $10.

IRS Form 1099-G

Ohio State Tax Extension

Vendors who receive payment for certain natural resources, forestry or conservation grants will receive IRS Form 1099-G. For example, if a company gives a grant to a vendor to research methods to produce goods with the least harmful effect on the environment, it will receive a 1099-G. A vendor is also eligible for this form if a company pays $10 or more towards tax refunds or unemployment benefits for the vendor.