I run a site and I wanted to know if I offer commissions to users of the site that referrer other people to subscribe to my site and I offer commissions to the people that brought in the new users, what are the tax implications? Do I need to create 1099s for everyone that I paid during the year or some other type of tax form?
You need to get W-9s from each payee.
If they are a US citizen and give you their SSN, you don’t need to file the 1099-Misc unless the payment is $600 or more (they still have to report the income).
If they don’t give you a valid SSN, you have to withhold 28% and send that to the government–and as soon as you withhold even $1, you have to issue the 1099-Misc.
If you think they aren’t giving you an SSN because they aren’t US citizens, then the form is the W-8Ben, the withholding rate is 30% and you issue a 1042-S at the end fo the year.
1099′s I believe are for income paid out over 900.00 dollars in a year, so if you are talking 20 or 30 dollars it should be a "no" however my big advise.. call the IRS and ask them.
References :
Paul M,
If you pay someone $600 or more in the course of a year then you need them to file with you a signed W-9 so you can issue them a 1099-MISC. You do not have to issue 1099′s to corporations. They will have to pick that up as Schedule C income on their personal tax returns.
References :
I am an accountant/controller/consultant/income tax preparer
Before you make payment, you must get W9, or similar form if they are residents, completed from the users.
If you pay $600 or more to a resident, you must file Form 1099-misc.
References :
http://taxipay.blogspot.com/2008/04/list-of-articles.html
You need to get W-9s from each payee.
If they are a US citizen and give you their SSN, you don’t need to file the 1099-Misc unless the payment is $600 or more (they still have to report the income).
If they don’t give you a valid SSN, you have to withhold 28% and send that to the government–and as soon as you withhold even $1, you have to issue the 1099-Misc.
If you think they aren’t giving you an SSN because they aren’t US citizens, then the form is the W-8Ben, the withholding rate is 30% and you issue a 1042-S at the end fo the year.
References :