The place that paid you has to give you a 1099-Misc to be able to prove that they paid you, so that they can deduct that amount as a business expense on their own income tax return.

In general, in order to be able to deduct a business expense for services you pay for, you have to report, using 1099s, that the amount you paid is income for the person to whom the money was paid, instead of for you.

The general rule is that you don't have to file the 1099 for payments of less than $500 or so, (unless it's to a lawyer, in which case its $50), but anyone who is making some reportable 1099 payments will generally be better off if they just put all their payments on the report.

Dave - putting 1099 income on a retired someone's "tax number" would subject them to the "self-employment" tax, even if they had no "taxable income." You have to pay that FICA/Medicare withholding even on income that's too small to require you to pay an "income tax." (It could also really screw up their Social Security benefit, if any questions come up.)

If you're retired, and working for someone as an employee, you may get by with no withholding for income taxes, and may not pay any "income tax;" but the employer still must withhold FICA/Medicare payments. If you're working as an "independent contractor" so that the employer doesn't withhold anything, you have to pay the FICA/Medicare withholding in the form of the "self employment tax."

There is also a distinct difference in how the tax system treats a participating member of a business and how they hit a "front man."

If it's your income, report it as such and pay the taxes. If it's someone else's income, tell the IRS who else is gonna pay the tax on it, and you take the deduction.

It's an acceptable practice (and favorite US indoor recreation) to use the business income return to "mine" all the possible expense deductions (depreciate the new microphone and amp, maybe; write off the new strings you put on for a gig; pay the printing costs and postage; etc.) but don't try to "hide" or "disguise" the transactions. If you use the reporting tools available, it's not necessary; and it's far too likely to get someone in real trouble.

John