Tax Season and 1099 MISC Forms

[Archbob]

So I got a question. In my business I have to license games for X amount of dollars fairly often. So my accountant told me I have to send 1099-MISC forms to these people I paid more than $600/year to that are in the USA. I don't have to send anything to those outside the USA right?

 

[JollyRoger]

So I got a question. In my business I have to license games for X amount of dollars fairly often. So my accountant told me I have to send 1099-MISC forms to these people I paid more than $600/year to that are in the USA. I don't have to send anything to those outside the USA right?

If you pay me enough so that you will need to send me a 1099-MISC, I will answer your question.

 

[SuperJay]

Wait, he said you have to send them a 1099-MISC? Wouldn't you be reporting payments made to those entities on your own tax return in a 1099-MISC?

Indirect answer to your question, my guess is No, you do not have to report payments made to entities that exist outside the U.S., because those entities are not filing U.S. taxes so the IRS is not verifying that those entities paid tax on the payments you made to them.

That's just a guess; I don't prepare returns for a living, I just document tax software. I'd review the form instructions at http://www.irs.gov/instructions/i1099msc/ar02.html#d0e89, specifically the Exceptions:

Exceptions. Some payments are not required to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include:

- Generally, payments to a corporation; but see Reportable payments to corporations on page 2;

- Payments for merchandise, telegrams, telephone, freight, storage, and similar items;

- Payments of rent to real estate agents, but see Regulations section 1.6041-1(e)(5), Example 5;

- Wages paid to employees (report on Form W-2, Wage and Tax Statement);

- Military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services (report on Form W-2);

- Business travel allowances paid to employees (may be reportable on Form W-2);

- Cost of current life insurance protection (report on Form W-2 or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.);

- Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government; and

- Certain payment card transactions if a payment card organization has assigned a merchant/payee a Merchant Category Code (MCC) indicating that reporting is not required. A cardholder/payor may rely on the MCC assigned to a merchant/payee to determine if a payment card transaction with that merchant/payee is subject to reporting under section 6041 or section 6041A. For more information and a list of merchant types with corresponding MCCs, see Revenue Procedure 2004-43 available at www.irs.gov/irb/2004-31_IRB/ar17.html.