1099 Msc Case Study

The IRS (Internal Revenue Service) requires all companies to send a 1099-MISC form to all nonemployees who received payments for freelance or independent contractor work during the prior year. The IRS also mandates that a copy of the 1099-MISC also be sent to the federal tax agency. The Pennsylvania Act 85 of 2012 now requires that companies send a copy of the 1099-MISC to the Pennsylvania Department of Revenue as well.

The Reason for the Change

The IRS wants copies of the 1099-MISC so it can compare the information provided by companies to the reported income provided by individuals on their income tax returns. The Pennsylvania Department of Revenue also wants records of payments for comparison with the income tax returns of its residents and other entities filing income tax returns in the state. These entities include business organizations designated as partnerships or single-person limited liability companies (LLCs) for tax purposes, or any entity required to submit Form 1099-MISC to the IRS. The 1099-MISC is sent to Pennsylvania residents and any nonresidents who received payments from Pennsylvania companies. …show more content…
The federal government's threshold for payments is $600, and the Pennsylvania Department of Revenue adheres to this same threshold. This means the following: If any payments made from Pennsylvania sourced income for nonemployee compensation exceed $600 in a calendar year, and this income can be reported in Box 7 of Form 1099-MISC, the company has to report this payment to the Pennsylvania Department of Revenue. The 1099-MISC form is required for residents and nonresidents of the state.

How to File Form

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1099 Msc Case Study