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Frequent Contributor *

Payments made from trust accounts

Hi,

 

I have an attorney for a new client.  They pay their clients medical bills, lawyers, etc from their trust account.  Does my client have to send out 1099's to vendors that are paid from the trust account?  I'm thinking no, but would like to confirm it with someone.

 

Thank you !

 

Vicki

Solved
Best answer 01-29-2019

Accepted Solutions
Established Community Backer ***

Re: Payments made from trust accounts

It doesn't matter if the payments are from Operating Bank or Trust Bank. The Payments that are made to Medical Service Providers are Box 6 of the 1099-Misc. The Payments to other lawyers might be Box 7 or 14.

 

You need to get the 1099-Misc instructions booklet from the IRS. That is your best resource.

 

Payments made by Credit Card, for instance, fall under 1099-K rules. Not 1099-Misc rules.

Frequent Contributor *

Re: Payments made from trust accounts

Thank you for your help. I did view the instructions, and there was nothing said specifically about monies being paid, to vendors from trust accounts.  

 

Thanks!

Established Community Backer ***

Re: Payments made from trust accounts

This is not listed in any detail, because it Does Not change anything: "and there was nothing said specifically about monies being paid, to vendors from trust accounts"

 

They Got Paid. The 1099-Misc rules is for what you paid them for, not Paid From "this account." Paying an Expert Witness or Medical Consultant from Trust or Operations still means they got Paid for their service.

 

And then there are the 1099-K rules, which apply to How they got paid = from the Payment Settlement Entity, such as Credit Card, PayPal, Amazon. Not from you = not reported.

5 Comments
Established Community Backer ***

Re: Payments made from trust accounts

It doesn't matter if the payments are from Operating Bank or Trust Bank. The Payments that are made to Medical Service Providers are Box 6 of the 1099-Misc. The Payments to other lawyers might be Box 7 or 14.

 

You need to get the 1099-Misc instructions booklet from the IRS. That is your best resource.

 

Payments made by Credit Card, for instance, fall under 1099-K rules. Not 1099-Misc rules.

Frequent Contributor *

Re: Payments made from trust accounts

Thank you for your help. I did view the instructions, and there was nothing said specifically about monies being paid, to vendors from trust accounts.  

 

Thanks!

Established Community Backer ***

Re: Payments made from trust accounts

This is not listed in any detail, because it Does Not change anything: "and there was nothing said specifically about monies being paid, to vendors from trust accounts"

 

They Got Paid. The 1099-Misc rules is for what you paid them for, not Paid From "this account." Paying an Expert Witness or Medical Consultant from Trust or Operations still means they got Paid for their service.

 

And then there are the 1099-K rules, which apply to How they got paid = from the Payment Settlement Entity, such as Credit Card, PayPal, Amazon. Not from you = not reported.

QuickBooks Team

Re: Payments made from trust accounts

Hi ATOZOOK,

 

I agree with qbteachmt. All instructions about 1099 payments are found in the booklet. You can also find it here: Form 1099-MISC.

 

Feel free to reach out to us if there's anything else you need help with QuickBooks. Thanks.

Frequent Contributor *

Re: Payments made from trust accounts

Thank you for the confirmation.