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ATOZOOK
January 30, 2019
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Payments made from trust accounts

  • January 30, 2019
  • 1 reply
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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

Best answer by qbteachmt

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.

1 reply

qbteachmt
qbteachmtAnswer
January 30, 2019

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.

    A
    ATOZOOKAuthor
    January 30, 2019

    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!

    qbteachmt
    qbteachmt
    January 30, 2019

    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.

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