I've done consulting for a number of companies and some of them give out 1099-MISC's and some don't. My question is... why do any of them give out a 1099-MISC?

If I wanted to subcontract out some work to a friend and I gave the friend, let's say, $2,000 for his efforts, I wouldn't give him a 1099-MISC. Among other things, I wouldn't know how to fill it out anyway. And even if I did... would I just give it to him and leave it at that? Or would I somehow give a copy of that 1099-MISC to the IRS as well?

idk it just seems that 1099-MISC's add administrative overhead and that the person being paid ought to be keeping track of how much they're getting paid anyway and that if they are keeping track then that, it seems to me, would eliminate the need for a 1099-MISC at the end of the year anyway.

  • 4
    You don't give just your friend a 1099-MISC form; you send a copy to the IRS too (and keep a copy for yourself). In particular, if you want to deduct that $2000 as a business expense (payment to a subcontractor), on your tax return, you better have your copy of the 1099-MISC that you gave to your friend in case of an audit. Feb 6, 2016 at 2:50

2 Answers 2


A corporation may need to prove their expenses to the IRS. One way to do this provide the IRS with information regarding their employees and vendors.

The employees have Federal, state and local income taxes withheld, plus social security and medicare. At the end of the year they provide the employee and the IRS with this information. They also do provide periodic updates during the year when they send the withheld funds to the proper government agencies.

For vendors they send the 1099-MISC to the vendor and the IRS. This reminds the vendor what they need to include on their tax forms. It also alerts the IRS that this vendor should be claiming this level of income. Of course the vendor may have their own employees and their own 1099-MISCs they will be generating to document their expenses.

THE IRS does allow a company to to skip vendors if the amount is less than $600 a year, but the vendor is still responsible for claiming the income.

If you are supposed to send a 1099 you must send it or that would be tax fraud. If the vendor doesn't put on their forms the income, that would be committing tax fraud.

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    Agreed. I worked for a friend's company and he didn't want me to have to pay taxes, but he had to give me a 1099 so he could prove it as an expense for his company. So even in cases where "you give some work to a friend" it might still be in your best interest to file the right documents.
    – JPhi1618
    Feb 5, 2016 at 18:36

The IRS can impose a penalty for not issuing 1099's when you are required to. This penalty can ranges from $30-$100 per form you didn't file. It can go up to $250 per form if they think you intentionally disregarded this requirement.

I'm betting the situations you are citing where they sometimes don't is because there are some situations where they don't have to. For example if you paid the person less than $600 in the year.

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