Learn about 1099 Tax Withholding for Non-Employee Compensation
Learn how tax is withheld from payments made to people or businesses that are not Columbia employees.
The Form 1099-MISC is used to report payments made to a person or business that is not being paid as an employee of Columbia University. These payments are called “non-employee compensation”.
Form 1099-MISC is required when total payments for the year exceed $600. The Form is provided by the University to the IRS and to the person or business that received payment. It will be mailed to recipients by January 31st of the following year.
On Form 1099-MISC the income earned will be recorded but there will not be any deductions for federal, state, or local income taxes, or social security, etc..
Form 1099 recipients are considered non-employees, therefore the University is not required to pay tax or make withholdings on these payments. These recipients are obligated to make their own tax deductions and forward payments to the Internal Revenue Service (IRS). Tax liability starts when total payments for the year exceed $600.
Typically the 1099-MISC Forms are given to independent contractors (or freelancers) as a record of the income they received. They are also issued for the following type of payments when the annual total exceeds $600:
- Awards - Honoraria
- Employees providing services outside of their regular duties/hours
- Independent Contractors
- Law Firms
- Limited Liability Corporations (LLCs)
- Patient Donors
- Payments for Medical Services
- Payments for Rents and Royalties
- Study Participants
- Study Subjects
The IRS requires that Columbia have a Taxpayer Identification Number (TIN) on file for every person or business that receives a reportable or taxable payment. This information is provided on Form W-9. US Citizens and Resident Aliens are required to complete a Form W-9 before receiving any payments from the University.
A TIN can be any of the following: a Social Security Number (SSN) an Individual Taxpayer Identification Number (ITIN) or an Employer Identification Number (EIN).