Does a booth rental hair stylist need to give her salon a 1099-MISC for the booth rent paid as well as file a corresponding 1096. How do I do that through Turbo Tax?

[memphisbauer]

We have filed our taxes for years via TurboTax, but never provided my wife's salon a 1099-MISC for the booth rent she pays. Is this a requirement? I've read that when providing them a 1099-MISC we would also file a corresponding 1096 with our taxes. Is this possible through TurboTax Home & Business? I've never seen this option before as part of the questions and walkthrough to filing.

Tax Question - Do we need to do this going forward?

Turbo Tax Product Question - Can the online software even do this?

[BarbL]

Yes, you will need to give the salon owner a 1099-MISC if more than $600 was paid as booth rent, assuming a non-corporate owner.  The rent you paid is reported in box 1 of the 1099-MISC form. You will need the name, address, and tax ID (SSN or EIN) for the salon owner.

The 1099-MISC forms can be prepared using Turbo Tax Quick Employer Forms.  As a user of Turbo Tax Home and Business, you will have unlimited, free access to Quick Employer Forms.  It asks you easy questions, and then completes the forms for you automatically. It even e-files the forms for you at no additional cost. 

Quick Employer Forms can be found here: Quick Employer Forms

Quick Employer Forms FAQs

[memphisbauer]

I just verified that the salon is setup as an S-Corp. In this case, do I need to give the salon owner a 1099-MISC?

[BarbL]

You do not need to provide a corporation (including an S-corporation) a Form 1099-MISC.

[jeannesator]

It depends on what the entity of the salon that you pays to files under. If they are incorporated you don't need to if they are a sole proprietor or partnership you do. Here is more info from a reputable online source.

Issuing Requirements

The IRS requires that you issue 1099s to any independent contractor who provided at least $600 worth of services to your business. Many businesses are unsure of the requirements for issuing 1099s to limited liability companies. The answer depends on how the LLC is treated by the IRS. For federal tax purposes, a limited liability company may elect to be taxed as a sole proprietorship, or Type D or "disregarded entity;" a partnership, or Type P; or a corporation, Type C.

Sole Proprietorships and Partnerships

If your payee is an LLC that is taxed as a sole proprietorship, you must issue the 1099 with certain information needed by the IRS. This includes the name of the sole proprietor, the name of the LLC and the Social Security number of the sole proprietor, which serves him as the tax identification number. If the LLC is taxed as a partnership, then the 1099 must carry the name of the business as well as its employer identification number, or EIN.

Corporations

You do not need to issue the 1099 to an LLC that is classified as a corporation for federal tax purposes. Corporations have strict IRS guidelines and different forms for reporting income that replace the use of a 1099. You may issue the 1099 to a corporation if you wish, but the purpose would only be to simplify your own recordkeeping. You also do not need to issue a 1099 to any LLC structure when you pay transaction costs for merchandise including the item cost, postage charges, delivery costs and storage.

[memphisbauer]

I just verified that the salon is setup as an S-Corp. In this case, do I need to give the salon owner a 1099-MISC?

[view2]

As a booth renter you must issue Form 1099-MISC for business rent paid of more than $600 or more to non-corporate landlords each year.

Tax Tips for the Cosmetology Barber Industry

https://www.irs.gov/pub/irs-pdf/p4902.pdf

[memphisbauer]

I just verified that the salon is setup as an S-Corp. In this case, do I need to give the salon owner a 1099-MISC?

[MaryK4]

You are not required to file information return(s) if you are engaged in a trade or business and the payment was made to another business that is incorporated, but was not for medical or legal services.   @memphisbauer