Garnishments with 1099 contractors: One scenario: alimony garnishment—set up two vendors (husband/"worker" and wife). Do they both get 1099s or just him for the full amount? And what if it's child support, or a lien on property?

Follow

Please see TAPN's article 1099: Assignment of Income and Middleman Regulations, in the Compliance section under 1099 Reporting. This article is based on information provided by Marianne Couch, Esq. Specifically, see the last section, "Liens, Levies, and Garnishments." Generally, the 1099 (just one) still goes to the vendor, who is the "beneficial owner" of the income. However, if part of the payment goes to an attorney, that must also be reported. See IRS Instructions for Form 1099-MISC and search "attorney" for guideline on reporting payments to attorneys.

(Marianne, of COKALA Tax Information Reporting Solutions, LLC, is a nationally known advisor and author on U.S. federal and state tax information reporting compliance. She was formerly director research for Balance Consulting. For further information, Marianne can be reached at 734.396.9041 or info@cokala.com.)

Have more questions? Submit a request

Comments