Accounting
My company rents a lab from a nonprofit corporation. Do we need to issue them a 1099-MISC? My understanding is we do not need to issue 1099-MISC to any corporations (except for attorney fees).
3
Answers
International Tax Attorney and U.S. CPA
Your company is required to file Form 1099-MISC for each person you paid rents of at least $600 during the year. There are, however, certain exceptions where some payments do not have to be reported on Form 1099-MISC. Generally, any payments made to a C corporation, S corporation, or an LLC treated as either a C or S corporation, are exempt from reporting. In addition, payments to a tax exempt organization are also exempt from reporting. You should request the non-profit organization complete and sign a Form W-9 which certifies its tax exempt status. You can certainly report the rents if you wish, but you are not obligated to report rents or other payments to tax exempt organizations.
Answered almost 6 years ago
Strategic thinker and communicator, author
Hi:
Ultimately, this is between you and your tax preparer, but given that the 1099-MISC includes a section for rent paid, it certainly reinforces this key expense as a distinct cost of doing business.
Meanwhile, the nonprofit will appreciate being able to point to non-donation revenue.
Good luck.
Kerby
Answered almost 6 years ago
🌎Harvard Certified Global Corporate Trainer🌍
A payment settlement entity is required to file a form 1099-K. In general, a company must meet certain requirements to be considered a TPSO. Unlike the 1099-MISC, the form 1099-K is sent to both individuals and corporations to report payments. Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. In other words, if a payor uses a credit card or TPSO to transfer funds to an independent contractor for a payment typically reported on a 1099-MISC, then the payor is required to report those payments on a 1099-K. Imagine you’re a sneaker seller on eBay earning a good portion of your income on the platform. It is unreasonable to expect every customer who buys shoes from you to file a 1099-MISC or report that payment to the IRS. But it is reasonable for eBay to bear the burden of combining the total amount you have earned on the platform selling shoes and report that to the IRS and to you. There are entities and organizations that may loosely fit the definition of a PSE but do not need to file 1099-Ks according to the IRS. In general, TPSO’s must file 1099-K for all payments made in the U.S. Payments to non-U.S.
Note: ACCORDINGLY, YOU ARE URGED TO CONSULT WITH YOUR OWN TAX ADVISERS REGARDING THE SPECIFIC TAX CONSEQUENCES OF YOUR PAYMENTS PROCESSED BY PAYABLE IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
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Answered about 4 years ago