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The IRS is at it again. They added two new lines to the Schedule C Profit and Loss from Business (Sole Proprietorship) which are questions that must be answered.
The two new lines on Schedule C are:
Did you make any payments in 2011 that would require you to file Form 1099?
If yes, did you file Form 1099 for those payees?
This is a big trap and it enforces compliance with the 1099 filing rules. You must file Form 1099 for any payee to who you paid more than $600 for services, rents and other specified payments. There are also other requirements for that are too numerous to list here. For example, 1099s are not required for the purchase of merchandise for resale and other specified items.
Form 1099 is required to be filed by Mar 1, 2012 for calendar year 2011. You need the name, address and Social Security number or Federal Employer ID number of the recipient.
Please note that you need not file 1099 forms for the operation of real estate reported on Schedule E, as that is not considered a trade or business for this purpose.
