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R. Klein, EA
R. Klein, EA, Accountant
Category: Finance
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Experience:  Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
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Do I issue a 1099-MISC to a non-profit 501c3 orgranization

Customer Question

Do I issue a 1099-MISC to a non-profit 501c3 orgranization for services or medical & healthcare?
Submitted: 2 years ago.
Category: Finance
Expert:  R. Klein, EA replied 2 years ago.
Non profits are usually set up as corporations. 1099 Rules indicate that corporations are exempt from receiving 1099 statements, EXCEPT for certain items which you must report on a 1099. Medical or Health care payments are reportable, but non-employee compensation (contractor payments) are not reported. A non-profit is considered to be engaged in a business or trade. Therefore, a 1099 IS REQUIRED to be sent for Medical payments.


If you are ever unsure, there is no penalty for sending a 1099 to someone who wasn't supposed to get one, but if you are required to send one and you don't, then you may be subject to a penalty. In other words, send a 1099 when unsure and you are always safe.

Source: 1099MISC instructions Page 1, Column 2.
http://www.irs.gov/pub/irs-pdf/i1099msc.pdf
Customer: replied 2 years ago.

1099MISC instructions Page 1, Column 2: doesn't that section refers to non-profits needing to issue 1099s, not necessarily if they should receive them?

 

But your answer makes sense in the fact that non-profits are set up as corporations (vs. sole proprietors, individuals, etc.) which I did not consider. Also, since attorneys and medical/healthcare are supposed to received 1099 regardless if they are a corporation or not, I will make sure I continue to issue 1099 for the medical/healthcare services (attorneys are never not-for-profit LOL!), but not for other services.

 

I greatly appreciate you answer. It was extremely helpful. Best regards, Renee

Expert:  R. Klein, EA replied 2 years ago.
When you are reviewing the citation, be sure to look a little higher up the column. It is easy to see the exception, but the bit about the non-profits is a little before that. You almost have to read the entire page.
R. Klein, EA, Accountant
Category: Finance
Satisfied Customers: 2882
Experience: Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
R. Klein, EA and other Finance Specialists are ready to help you
Customer: replied 2 years ago.
Thank you so much! You've greatly helped me and I appreciate it immensly!
Customer: replied 2 years ago.
Follow-up: Can you tell me if I should issue a 1099-MISC to a group home. (I should note that the issuer/payer is county government.) In your answer, it was decided that I should send 1099's to medical/healthcare services, but how about group homes?
Expert:  R. Klein, EA replied 2 years ago.
Again, better safe than sorry. No penalty to send someone a 1099 that doesn't need it. Regardless, I would send one unless they meet an exception.
Customer: replied 2 years ago.
I'm overstepping now, and I apologize, but one more question: How about hotels that are not corporations? If so, rent or non-employee compensation?
Expert:  R. Klein, EA replied 2 years ago.
I am not certain what service you are providing hotels. Unless the hotel operator did work for you not in the ordinary course of running a hotel, I am not certain why you would send a 1099. But certainly it would not be Box 7.
Customer: replied 2 years ago.
Just wondering about payments made to hotels for hotel rooms for employees for out of town stays.
Expert:  R. Klein, EA replied 2 years ago.
You do not send 1099s for those type of payments. The IRS recognizes this as normal business.

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