A Refresher Course on Form 1099: Filing Deadline ApproachingDecember 28, 2015
The Form 1099 must be distributed to all applicable non-employees by January 31st —are you prepared?
Form 1099 is due to independent contractors January 31st- is your business prepared? If you paid anyone besides employees this year in the amount of $600 or more, you are required to issue these individuals a Form 1099. It is vitally important that you comply with 1099 filing requirements, or you will face costly penalties from the IRS.
Form 1099 Basics
Form 1099 is a type of information return that the IRS requires for reporting income from:
- Self-employment earnings
- Interest and dividends
- Government payments, and more
Form 1099 must be issued to anyone your business paid this year (besides employees). Examples of this include:
- Anyone paid at least $10 in royalties or tax-exempt interest.
- 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.
- Anyone paid fishing boat proceeds.
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 more common versions of the form are:
- 1099-MISC- This 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”.
- 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 1099 must be given to applicable parties by January 31st and the completed form is due to the IRS by February 29th this year. E-filing is due March 31st. There are a few things taxpayers should remember while filing:
- The form 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 the form online through FIRE (Filing Information Returns Electronically) system. Any business who 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. Read our blog, “1099 Filing Question: Can my Company Issue a 1099 Using Only Partial Social Security Numbers?” for more information on the ability to use truncated versions of tax ID numbers in certain circumstances.
What are the penalties for not filing?
- $30 penalty for filing not more than 30 days late.
- $60 penalty for filing more than 30 days late but before August 1st.
- $100 penalty for filing on or after August 1st.
- $250 penalty for intentionally neglecting to file.
There is also a penalty for errors in the form—such as the form lacking a tax identification number (TIN), or containing a wrong TIN.
Be sure to get all forms out by January 31st—You do not want to run into a situation where you are forced to pay hefty penalty fees!
Refer to the IRS Instructions page for more information.
Questions on form 1099? Contact any member of our Tax Services Team.