The 1099-Misc form reports the total amount paid to a vendor for the services they have provided your company. Generally, the person closing the transaction is required to file the return. Due diligence requires that you obtain correct information to use when completing your filings, including the full name of the company/person paid, their address and their Employer Identification Number (EIN) or Social Security Number (for Sole Proprietors). The IRS requires that you have this information at year end to complete your filings.
Per the IRS Instructions, the Form 1099-Misc needs to be completed in all of the following types of payments:
- At least $600 in rents, services, goods, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
- At least $10 in royalties.
- Any fishing boat proceeds.
- Gross proceeds of $600 or more paid to an attorney.
Form W-9
Obtaining an IRS Form W-9 is the safest way to get the required information to submit accurate 1099s at the end of the year. Getting a completed W-9 from your vendors can be difficult at times. Obtain the completed W-9 prior to issuing any checks out of your business. This is the absolute best way to ensure that you have accurate information in your files prior to the end of the year. Follow this link to print your W-9 copy: http://www.irs.gov/pub/irs-pdf/fw9.pdf
Due Date
All Form 1099s need to be completed and provided to the recipient by January 31st of each year. In addition, you will need to file a copy of the Form 1099s issued and the Form 1096 transmittal with the IRS by February 28th if a paper copy or by March 31st if filed electronically.
Penalties
As with all Tax forms, penalties can be assessed if you do not file your returns timely. The penalties can range from $30 to $250 per 1099 for not filing the forms on time, filing them with incomplete information or negligence by intentionally filing false information if the IRS can show “intentional disregard”.
Disclaimer - The information contained in this blog is for general informational purposes and is not intended to substitute for accounting, tax, legal, investment or other professional advice. Before taking any action, you should consult with a qualified professional provider who understands your particular factual situation.
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