1099-MISC

1099-MISC

If you have questions on a Form 1099-MISC issued to you by the University of Utah, please fax your question to 801-587-9855 or email your question to: Sara Emery. With your fax or email, please give your name, vendor number, taxpayer identification number, your question and a phone number where you can be reached. Please allow 2-4 business days for Tax Services to respond to your question.

The University is required to file Form 1099-MISC, Miscellaneous Income, for each calendar year if total payments made to the recipient are for (1) at least $10.00 in royalties, or (2) at least $600.00 in rents, services (including parts & materials), prizes and awards, other income payments, medical/ health care payments and legal services.

Exceptions

The IRS does not require some payments to be reported on 1099-misc forms although they may be taxable to the recipient. These include:

(1) Payments to a corporation (with the exception of medical/health care and legal fees)

(2) Payments for merchandise

(3) Payments of rent to real estate agents

(4) Wages paid to employees (report on form W-2)

(5) Scholarships and Fellowships

(6) Accountable plan payments. Payments made to an employee under “an accountable plan” are not reportable. The requirements of an “accountable plan” are found in Treasury Regulation 1.62-2 and they require that the payee must:

a. Establish the business purpose and connection for the expenses

b. substantiate or document the expenses claimed to the payor within a reasonable time period

c. return to the Payor any amounts in excess of the substantiated expenses within a reasonable time period

The University’s 1099able payments include:

Box 1 – Rents:

Machine rentals

Pasture rentals

Real estate rentals paid for office space unless paid to a real estate agent

Box 2 – Royalties:Industrial

Literary

Patent

Box 3 – Other Income:Box 3 is for other income required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form.

Prizes and awards that are not for services performed.

Blood donors

Research subjects

Compensatory damages

Box 6 – Medical and health care payments:

Physician and other supplier/provider of medical or health care services. Corporations are not excluded for medical/health care services. This income is 1099able. Medical transcriptions are not medical services and are included in box 7.

Box 7 – Non Employee Compensation:Includes fees for services performed, or other forms of compensation for services performed for the University by an individual who is not a University employee.

Payments where an employee-employer relationship exists are paid through Payroll.

The IRS assumes payments reported in box 7 to be subject to self-employment tax.

If the following four conditions are met, a payment generally is reportable as non- employee compensation:

(1) The payment was made to someone who is not a University employee

(2) The payment was made for services in the course of the University’s trade or business

(3) The payment was made to someone other than a corporation (except for legal fees), i.e., an individual or a partnership

(4) Payments were made to the payee of at least $600.00 during the “calendar” year

Example of payments reported in Box 7 are:(a) Professional service fees such as to attorneys, accountants, and architects

(b) Payment for services, including parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service.

(c) Payments to non employee entertainers for services.

(d) Honorariums

(e) Guest Lecturers

(f) Independent Contractors

(g) Legal Fees

(h) Reimbursement payments to any of the above in Box 7 when receipts or documentation is not provided are 1099 table.

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