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If Your Accounting Firm is Organized as a Partnership, the IRS Requires 1099s for Fees Paid

The IRS requires businesses, self-employed individuals, and not-for-profit organizations to issue Form 1099-MISC for professional service fees of $600 or more paid to accountants who are not corporations.

A Form W-9 Request for Taxpayer Identification Number and Certification should be completed by the recipient and provided to the payer. The completed form will provide the business name, address, Taxpayer Identification Number (TIN) and tax classification, which is information necessary to complete the Form 1099-Misc. The Form W-9 can be downloaded from the IRS website.

Accounting Fee Treatment for Self-Employed Individuals

For self-employed individuals, it is common practice to allocate portions of accounting fees to different schedules on an income tax return.  The IRS adds some complexity due to the fact that the business portion of the accounting fees requires 1099 reporting, while the personal portion is not reported.  This subject takes on added importance because the IRS now asks on every business income tax form whether you made any payments that require form 1099 and whether you filed the required 1099’s.

Also an added note for security:  Self-employed individuals who use their social security number can obtain a business federal ID number so that they issue 1099’s with the federal ID number instead of handing out their personal social security number.

All Insights

March 2, 2020

Kenneth P. Allen

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