Are medical and healthcare payments reportable to a corporation on a 1099-MISC form?

Yes.  Medical and healthcare payments made to corporations generally must be reported on a 1099-MISC form.  Payments to corporations are typically not reportable, however, medical and healthcare payments are one of the exceptions to this general rule.  The term corporation includes C corporations, S corporations and LLCs that have elected C or S corporation status.

For additional information see the 2019 Instructions for Form 1099-MISC 

Are attorney payments reportable to a corporation on a 1099-MISC form?

Yes.  Attorney fees of $600 or more paid in the course of your trade or business to a corporation should be reported on a 1099-MISC form, Box 7, under section 6041A(a)(1).  Payments to corporations are typically not reportable, however, attorney payments are one of the exceptions to this general rule.  The term corporation includes C corporations, S corporations and LLCs that have elected C or S corporation tax status with the IRS. The term “attorney” includes a law firm or other provider of legal services.

Gross proceeds paid to an attorney that is a corporation are also reportable in Box 14 that:

  • Are made to an attorney in the course of your trade or business in connection with legal services, but not for the attorney’s services, for example, as in a settlement agreement;
  • Total $600 or more; and
  • Are not reportable by you in box 7.

For additional information see the 2019 Instructions for Form 1099-MISC 

Are medical and health care payments reportable on a 1099-MISC form?

Yes.  Payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services are reportable. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases, the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs.

The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States (or its possessions), a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.

For additional information see the 2019 Instructions for Form 1099-MISC 

How can I tell if a worker is an employee or an independent contractor?

For federal employment tax purposes, the usual common law rules are applicable to determine if a worker is an independent contractor or an employee. Under the common law, you must examine the relationship between the worker and the business. You should consider all evidence of the degree of control and independence in this relationship. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and Relationship of the Parties.

Behavioral Control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training, or other means.

Financial Control covers facts that show if the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:

  • The extent to which the worker has unreimbursed business expenses
  • The extent of the worker’s investment in the facilities or tools used in performing services
  • The extent to which the worker makes his or her services available to the relevant market
  • How the business pays the worker, and
  • The extent to which the worker can realize a profit or incur a loss

Relationship of the Parties covers facts that show the type of relationship the parties had. This includes:

  • Written contracts describing the relationship the parties intended to create
  • Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
  • The permanency of the relationship, and
  • The extent to which services performed by the worker are a key aspect of the regular business of the company

Are “S” and “C” limited liability companies considered corporations?

If a limited liability company lists a “C” or “S” as the tax classification on their W-9 form, they are considered a corporation for 1099-MISC and 1099-NEC purposes by the IRS.   The “C” code means that the IRS approved their Form 8832 application to be taxed as a C corporation.  The “S” code means that the IRS approved their Form 2553  application to be taxed as an S corporation.  In both instances, the LLC entity is still a limited liability company but the IRS treats the LLC as a corporation for tax purposes.  Therefore, any exemption in the 1099-MISC and 1099-NEC instructions applies to an LLC that has made either one of these elections.

For more information see the Instructions for Forms 1099-MISC and 1099-NEC.