What You Need to Know About Filing 1099s

What You Need to Know About 1099s

2023 Update

1099 Basics:

    • Required by the IRS.
    • You must report payments to contractors and service providers who are not your employees.
    • Required for each vendor you paid over $600 in 2023.
      • Exclude payments made by:
        • credit cards
        • debit cards
        • gift cards
        • Payment apps
          • CashApp
          • PayPal
          • Stripe
          • Venmo
      • Zelle payments must be included.

 

  • You do not need to send a 1099 to corporations or s-corps, with a couple of exceptions:
    • Attorneys: Must send a 1099 for all service fees -even if incorporated
    • For-Profit Medical Providers: Must receive a 1099

Which 1099 Form to Use

    • 1990-NEC (Non-Employee Compensation)

      • Common Examples of Non-employee service providers:
          • Independent contractors
          • Consultants
          • Accountants
          • Cleaning professionals
          • Landscapers
          • Attorneys (fees only)

    • 1099-MISC (Miscellaneous)

        • Common Examples:
          • Rents
          • Royalties
          • Prizes
          • Medical/Health Care Payments

What Do I Need to Do?

    • Request Form W9 from all vendors who meet the above criteria.
        • The W9 is simply a request for information. It provides the vendor’s taxpayer identification number and business entity type (sole proprietor, LLC, S Corporation).
        • If you already have a W9 on file for that vendor, you only need to request a new one if their ownership structure has changed.

    • Best practice: require a Form W9 from every new vendor before you pay them.

How to File 1099s

    • Options:
      • Paper Filing – you cannot use online fillable forms. You must purchase IRS-approved forms from an office supply store. 
      • Electronic Filing: Required if you are filing ten or more forms
    •  

    • Completed Form Must be Sent to:

      • Vendor
      • IRS
      • State 
        • The IRS will forward the information to MOST states. 
        • It’s best to verify the policy for your particular state
      • Copy for your files

Deadlines:

    • 1099-NEC
      • Due to recipient: January 31
      • Due to IRS: January 31
    • 1099-MISC
      • Due to recipient: January 31
      • Due to IRS:
        • Paper filing: due February 28
        • Electronic filing: due April 10

Penalties:

    • Failure to file by the due date:
      • $60-$310 per recipient (Maximum penalty: $1,261,000)
      • Intentional disregard: $630 per 1099 (No Maximum penalty)

 

Need Help Filing Your 1099s?

If you’d like help filing 1099s, please reach out. I’ll help you determine which vendors require 1099s, and complete and submit the forms.

Click Here to Schedule a Call

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