If you are a business owner or a self-employed individual, there is a tax deadline that is right around the corner that you need to be aware of; and we aren’t referring to the April 15 deadline! The deadline to issue IRS Form 1099-MISC is January 31. 2017. So how do you know whether or not you need to issue 1099s or if you should have received one and what goes into these forms? Here are the key things you need to be aware of:
- There are various types of Form 1099s. They are considered informational forms by the IRS.
- Form 1099-MISC is most relevant to self-employed individuals and reports the various types of income earned throughout the year other than salary/wages paid by an employer.
- If you are a business owner and you engaged the services of an individual other than someone meeting the definition of an employee, you need to complete and ISSUE a Form 1099-MISC for total amounts paid to that individual throughout the year that collectively are in excess of $600.
- Form 1099-MISC is also used to report payments for rent, royalties and amounts paid to attorneys for legal services.
- All Form 1099-MISC must be completed and sent to recipients by January 31, 2017 for the 2016 tax year.
- As a business owner, once you have issued 1099s to recipients, you must file a Form 1096 with the IRS and include copies of the issued 1099s by January 31, 2017 for non-employee contractors (box 7 on the 1099) regardless of whether filing manual or electronic forms.
- The IRS imposes a fine for missing the deadline for filing these forms. These fines range from $50 to $260 for each missing or late form.
- If you are a freelance/self-employed individual and did contract work for others, you must RECEIVE the appropriate Form 1099 for all work for which you were compensated in an amount over $600.
- Omission of a Form 1099 from your income tax return will likely result in penalties and interest imposed by the IRS.
- Important to note: you cannot use a downloaded Form 1099. You must use a specific form that is readable by an IRS scanner.
If you have additional questions or would like assistance with preparing Form 1099-MISC, please contact Whitehead Business Solutions at 214-236-8376 or firstname.lastname@example.org.
We can also assist you with streamlining your process for collecting information from vendors throughout the year to make completion of your Form 1099s more efficient in the future.