1099 Filings: Upcoming Deadlines and Important Changes for Businesses

Posted by Jessica Rizzo on Jan 12, 2021 11:59:28 AM
Jessica Rizzo
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As a CPA firm, we prepare 1099 forms for many of our clients, and as the deadlines for these filings approach, we thought it would be beneficial to provide an overview of the 1099 process and upcoming deadlines, as well as some important changes that take effect this year.

What is a 1099, and Who is Required to File One?

In general, a 1099 form is a record of income paid to someone by anyone other than the person’s employee—for example, an organization must file a 1099 form if they paid any independent contractor, vendor, or freelancer would receive a 1099 form for services rendered. In this case, the organization must first request a W-9 from any non-employees paid for a service, then complete the form and submit copies to both the payee and the IRS.

There are heavy penalties for late submissions and incorrect information—the maximum penalty is $1,113,000 for small businesses (those earning an average of $5 million or less in revenue for the past three years)—so it’s important for employers to be prepared to file on time.

There are more than a dozen different 1099 forms, each covering a different type of income, and with varying due dates for providing a copy to recipients, IRS paper filing and IRS e-filing. For small businesses, the 1099-MISC has always been the most significant of these forms, on which businesses would report payments to non-employees. However, for 2020 filings, the IRS has required that these payments be reported on a new form called 1099-NEC.

1099-NEC

As mentioned above, organizations are now required to file this form if they paid any non-employees for services rendered, made in any amount of at least $600 for the year, including:

  • Payments made to someone who is not your employee, (such as independent contractors, self-employed individuals, or freelancers), including payments made by government agencies and non-profit organizations to service providers
  • Payments made for services in the course of your trade or business, including parts and materials used in conjunction with said services
  • Payments made to an individual, partnership, estate, attorney, or in some cases, a corporation

1099-NEC Deadlines:

  • 02/01/21: Recipient copy deadline
  • 02/01/21: IRS paper filing deadline
  • 02/01/21: IRS e-file deadline

1099-MISC

The 1099-MISC should still be used by organizations to report payments that do not fit into other 1099 categories, such as income in the form of prizes and awards.

1099-MISC Deadlines:

  • 02/01/21: Recipient copy deadline (if there is NO data in box 8 or 10)
  • 02/16/21: Recipient copy deadline (if there IS data in box 8 or 10)
  • 03/01/21: IRS paper filing deadline
  • 03/31/21: IRS e-file deadline

If you have any questions about filing 1099-NEC, 1099-MISC, or any other tax filings, please leave a comment below, or contact me directly, I’m happy to help!

Topics: Tax, Business Advisory