The Farm CPA
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
Payments to Veterinarians Require 1099 (Even If Incorporated)!
May 06, 2014
Most farmers are used to preparing form 1099s in January of each year for any unincorporated businesses that provide services to them during the year. Once those total payments exceed $600, the farmer is required to issue a form 1099-MISC. If the business providing the services is incorporated, then a form 1099 is normally not required.
However, for many years, Congress has required a form 1099 be issued to any medical provider that provides services exceeding $600 in a calendar year and these rules require a form 1099 for any entity. Therefore, if the medical provider is incorporated, the business would still need to issue a form 1099.
The IRS released guidance late last year indicating that veterinarians meet the definition of a medical provider, therefore, if the farmer pays more than $600 to any vet during the year, they should issue a form 1099 at the end of the year, even if the vet is incorporated. If you have a vet that provides services during the year and these payments exceed $600 for the year, make sure to issue a form 1099 to them at year-end. Instead of being listed in box 7 (non-employee compensation), these payments will be listed in box 6 (medical and health care payments).
Tomorrow starts the three-day AICPA Ag Conference in Austin, Texas. I am looking forward to the line-up of speakers that we have this year and will fill you in on anything worthwhile that may happen.