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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10149
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If my company pays to an individual a sum of over $ 4000.00

Customer Question

If my company pays to an individual a sum of over $ 4000.00 for the work he performed during various times during a year, and I did not collect his SSN and do not issue him 1099, what are my tax consequences, can I still write the expenses off, even though
I could not issue 1099 because I do not have W 9?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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I'll answer here, as it looks like no one else is picking it up.

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(Please don't shoot the messenger here), but (1) yes you certainly CAN deduct the expense... However, (2) IRS will tell you that you should still maintain compliance with the requirement to send a 1099 to the last known address and the IRS copy TO IRS

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Ideally, the subcontractor’s Social Security number is ***** before any payments are made for work completed for you. Form W-9 can be used for that purpose, although it is not required.

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To maintain compliance with IRS guidelines, you must make a formal request to the subcontractor for his identification number before the end of the year. If you do not have the Social Security number by the time to file Forms 1099-MISC, you should leave the identification number box empty, but still submit the report to the IRS.

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The IRS will send a notice stating that the number is ***** This notice must be sent along with a backup withholding notice and W-9 form to the subcontractor. This notifies the subcontractor that he will be subject to withholding until he submits his identification number. He is also subject to a penalty of $50 for failure to furnish the Social Security number to you.

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The intuit folks articulate that well here:

https://ttlc.intuit.com/questions/1968941-sub-contractor-paid-won-t-give-social-security-number

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And here's anbother good piece on this:

http://smallbusiness.chron.com/subcontractor-wont-submit-federal-id-number-37811.html

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Let me know if I can help further

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Lane

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I hope you'll rate me positively, using the stars on your screen … (that's the only way we get credit for the work here) … based on thoroughness and accuracy, rather than any good news/bad news content

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