Form 1099-MISC: is an Internal Revenue Service (IRS) tax return document that covers reporting for a wide range of payments made to non-employee individuals (e.g., independent contractors) over the course of the year on behalf of your trade or business. Personal payments are not reportable.
When is Form 1099-MISC required?
Businesses or self-employed individuals will need to fill out a Form 1099-MISC for persons, vendors, subcontractors, independent contractors, and others in the following circumstances:
$600 or more per year is paid for:
- Services (including incidental parts and materials)
- Rents
- Prizes and awards
- Medical and Healthcare payments
- Proceeds paid to attorneys
- Cash payments for certain crop and aquatic proceeds
- Other types of payments not covered by another information reporting document
$10 or more per year is paid for:
- Broker payments in lieu of dividends or tax-exempt interest
- Royalties
Steps to Take to Prepare for 1099 MISC Forms:
- Request that your vendors, contractors and other payment recipients submit to you a Form W-9. The W-9 will provide you with the correct legal name, address, and taxpayer identification number for the vendor, which is the information you will need when preparing any 1099-MISC forms.
- You should also keep track of your payments in your bookkeeping system to know the exact amount you paid the recipient for the year.
Penalties for Filing Form 1099-MISC late:
- $30 penalty for filing a 1099 for being 30 days late; maximum penalty $250,000 per-year ($75,000 for small businesses)
- $60 penalty for filing a 1099 more than 30 days late, and before August 1; maximum penalty $500,000 per-year ($200,000 for small businesses)
- $100 penalty for filing a 1099 on or after August 1; maximum penalty, 500,000 per-year ($500,000 for small businesses)
- $250 penalty for intentional failure to file
Deadlines for 1099-MISC forms:
The new due date if using box 7 (non-employee compensation) for paper and electronically transmitted forms sent to the IRS is January 31st. If filing Form 1099-MISC reporting any other box, the IRS filing due date is unchanged and is by February 28th if you file on paper and March 31st if you are filing electronically. The due date for furnishing payee statements remains January 31st.
For more information on the above article or any outsource accounting needs, contact Murry Guy, CPA at (334) 887-7022 or by leaving us a message below.
