IRS Form 1099: Filing Deadline Approaching
posted Jan 9, 2018 by Paul Oliveira, CPA in the Global Tax Blog
Attention businesses—filing deadline approaching! If you paid anyone besides employees this year in the amount of $600 or more, you are required to issue IRS Form 1099 to all of these independent contractors by January 31st. It’s important that you comply with 1099 filing requirements, or you may face costly penalties from the IRS.
Form 1099 Basics
Form 1099 must be issued to anyone your business paid this year (besides employees). Examples of this include:
- Anyone paid at least $600 in rents, services, prizes and awards, medical and health care payments, or other income payments.
- Attorneys paid gross proceeds of $600 or more.
What about homeowners?
If homeowners spend more than $600 on expenses such as child care or landscaping, do they need to give their child-care provider or landscaper a 1099 tax form?
Typically, because family expenses, such as child-care providers and landscapers are for personal services, rather than business services, homeowners don’t have to provide them a 1099 form. 1099s are only required to be issued by businesses for services provided in the normal course of a trade or business. As with anything, there can be exceptions. For example, if a business hires a child care provider as a benefit for its employees, a 1099 is required to be given to the child care provider, if the child care provider earns over $600 in a given year.
Are there different versions of 1099?
Yes—there are several versions of the Form 1099. The version required to be provided to nonemployees is based on the types of income that is being reported. The 1099-MISC is essentially the most widely used version and is used for nonemployee compensation, rental income, royalties, attorney fees, and boat proceeds. Read our blog, “Guidelines on filing Form 1099-MISC”.
Other versions include…..
- 1099-INT is used to report interest income.
- 1099-S covers sales and exchanges of real estate or land.
- 1099-C is used for cancelled or forgiven debt.
- 1099-R is used for life insurance contracts, retirement plans, annuities, and pensions.
- 1099-DIV is used for dividends and distributions of liquidations and capital gains.
Form 1099s must be provided to the applicable recipients by January 31. A summary of your company’s 1099s (Form 1096) and the 1099s must also be provided to the IRS by:
- January 31 when you’re reporting non-employee compensation in Box 7,
- February 28 if filing by paper when you’re not reporting non-employee compensation in Box 7, and
- March 31 if filing electronically when you’re not reporting non-employee compensation in Box 7
There are a few things taxpayers should remember while filing:
- The Form 1099 cannot be printed from home—you have to get a copy on special paper from the IRS. They are often available at office supply stores as well.
- Taxpayers can file Forms 1099 and Form 1096 “Annual Summary and Transmittal of U.S. Information Returns” with the IRS online through FIRE (Filing Information Returns Electronically) system. Any business which is required to file 250 or more information returns per year must file electronically.
- In most cases, you need a tax identification number to complete the form.
What are the 2017 penalties for not filing, per 1099?
- $50 penalty for filing not more than 30 days late.
- $100 penalty for filing more than 30 days late but before August 1st.
- $260 penalty for filing on or after August 1st.
- $530 penalty for intentionally neglecting to file.
Note* there is also a penalty for errors in the 1099 forms—such as the form lacking a tax identification number (TIN), or containing a wrong TIN.
You don’t want to pay hefty penalty fees! Be sure to get all 1099 forms out to recipients by January 31st.
Questions on the Form 1099 or summary form 1096? Contact any member of our Tax Services Team.