Form 1099: Deadlines, Penalties, and Filing Requirements for 2019/2020

With the arrival of the year 2020, the deadlines to submit the 1099 form are closer. Therefore, employers must prepare and issue copies of the 1099 form to their respective recipients, and submit them to the Internal Revenue Service (IRS or Internal Revenue Service) in an efficient and timely manner. Learn about the requirements of the 1099 form here.

The 1099 tax form, called “Information Returns” by the IRS, must be sent by a company/employer to any contractor or independent worker who has hired and paid at least $600 in 2019. There are many types of 1099 forms, the most common of which are the 1099-MISC, 1099-INT, 1099-S, 1099-C, 1099 B, 1099-R, and 1099-DIV.

However, it is important for small business owners or employers to prepare and file the appropriate 1099 forms before this year’s deadlines, otherwise heavy penalties will be imposed for late filing or misinformation. For this reason, we have decided to present you with a table that will help you to be clear about the deadlines to submit the form this year; but first let’s start by explaining some basic issues.

What is a 1099 form and what is it for?

The form 1099 is an Internal Revenue Service tax return document used to report payments made to non-employees, such as contractors or freelancers, during a fiscal year.

In general, a 1099 form must be filed for each person an employer has paid:

  • At least $600 in services, rent, prizes or awards, and any other type of payment.
  • At least $10 in royalties or payments to brokers in lieu of tax-exempt interest dividends.
  • Gross income to a lawyer.

In addition, Form 1099 must be used to report any income from any of the following:

  • The result of the direct sale of at least $5,000 of consumer products for resale in any place other than a permanent retail establishment.
  • Each person from whom the employer has withheld federal income tax under the reserve withholding rules.

On the other hand, payments that are not reported on the 1099 form include:

  • Generally, payments to corporations (unless it is considered a “reportable payment” or you are an attorney, who should receive a Form 1099, regardless of the status of the corporation).
  • Employee income (report income on W-2s).
  • Payments to tax-exempt organizations in the United States, the District of Columbia, a US possession, or a foreign government.

Deadlines to submit the form 1099 of 2019

The term of January 31 only applies to Form 1099-MISC with an amount in Box 7, Non-Employee Compensation, while the filing deadline for the other forms (1099 and 1096) remains February 28, 2020 if filed on paper, and March 31, 2020 if filed electronically.

Shape Submission Deadline to Contractors/Independent Workers Deadline for submission to IRS by mail IRS Online Submission Deadline
1099-MISC (NEC only) January 31, 2020 January 31, 2020 January 31, 2020
1099-MISC (Other forms) January 31, 2020 February 28, 2020 March 31, 2020
1099-DIV January 31, 2020 February 28, 2020 March 31, 2020
1099-INT January 31, 2020 February 28, 2020 March 31, 2020
1099-R January 31, 2020 February 28, 2020 March 31, 2020

Late Filing Penalties

Penalties range from $50 to $550 per 1099 form, with the amount depending on how late the forms are filed.

fine for form Amount of time it took to submit the form
$50 more than 30 days
$110 More than 30 days but before August 1, 2020
$270 Sent on or after August 1, 2020
$550 The form was not sent

The maximum penalty is a total of $1,113,000 for small businesses. In all cases, the IRS considers a small business a small business if it has earned an average of $5 million or less in annual revenue for the past three tax years.

New State Filing Requirements for Form 1099

States where the combined state/federal program applies

Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, South Carolina, Vermont, Virginia, Wisconsin.

States without 1099-MISC filing requirements

Alaska, Florida, Illinois, Nevada, New Hampshire, North Carolina, New York, South Dakota, Tennessee, Texas, Washington, Wyoming.

States that require the filing of Form 1099-MISC

Kentucky, Rhode Island, Utah, West Virginia.

States that require separate filing or do not have clear procedures regarding filing requirements from form 1099-MISC

Iowa, Massachusetts, Oklahoma, Oregon, Pennsylvania, Washington DC.

Can I request an extension?

You may be able to get an automatic 30-day extension to file Form 1099 or other tax returns.

To get this extension, you must complete and file IRS Form 8809 by the due date (January 31 of the year following the tax year).. You can mail the form or file it online using the IRS system, which is the same system you would use to file the 1099 electronically.

Preparing a 1099 form in six steps

Here are six simple steps to follow to help you prepare a form 1099 while adhering to IRS guidelines and filing requirements.

1. Review all the work done during the year

Before starting the process, make sure you have all the information of the contractors, workers and suppliers. You should already have a completed W-9 form for each of them that includes their name, address, and Social Security Number (SSN) or Employer Identification Number (EIN). The W-9 will also include their tax filing status, so you can check if you need to issue a 1099 for that specific provider.

Now, before you start the process, it’s a good idea to check with each contractor to see if any information has changed. If the contractor has not provided a W-9 or has omitted specific information, you can withhold 28% of the payment and send it directly to the IRS. This is known as “backup retention.”

2. Get 1099 forms

Once you have all the information you need, it’s time to get the 1099 forms. You cannot use a downloaded 1099-MISC form or a sample from the IRS. And if you’re doing the process on paper, you’re required to use specific forms that are readable by the IRS scanner used to process all 1099s. You can request these forms from the IRS by calling 1-800-TAX-FORM (1-800-829-3676) or visiting their website.

Form 1099 to print here.

There are also alternative sources to obtain these forms. You can order them at some office supply stores, or you can use financial software like QuickBooks to create, distribute, and file your 1099 forms online. You can also purchase pre-printed 1099 forms that allow you to print all of the information from QuickBooks directly onto the appropriate sections of the 1099 form..

3. Fill out the forms

Now that you have the contractor information and forms in hand, it’s time to fill them out. Start with your federal tax identification number, which could be an SSN or EIN. Then, you add the contractor’s information, which includes their SSN or EIN.

Each 1099 must also include the amount of money paid to the contractor, which is entered in Box 7 under the heading “Non-Employee Compensation.” If you withheld any payments from the contractor (for example, because you had to apply the “back-up withholding” mentioned above), you will also need to fill in box 4 or 11 for any federal or state income taxes.

Finally, verify that all the information is correct. Repeat this for each contractor you have worked with.

4. Submit the forms

The next part of the process is to submit the forms. You must mail or deliver each B copy of the 1099 to the contractor no later than February 1. As you have seen before, failure to meet this deadline can lead to fines.

It is essential that these forms are mailed to contractors on time because they need them to make tax payments, report total amount earned, and ultimately file Form 1099-MISC..

5. Submit Form 1096 to the IRS

Form 1096 summarizes the totals of your returns, in this case, your 1099. If you file by mail, you must send Form 1096 and Copy A of each Form 1099 to the IRS no later than February 29. If you file electronically, forms must be submitted by the March 31 deadline.

6. Keep a record of all your statements

Finally, be sure to keep Copy C for your files, in case there are any questions or concerns regarding the information you provided to the IRS.

What if there is an error on the 1099 form?

If you make a mistake preparing a 1099 form and you find out before you send it, just fix it. That is why there is a one-month lag between the forms being delivered to workers and their submission to the IRS.

Now, if you discover the error after you have submitted the form to the IRS, you must submit a corrected 1099 form. To do so, check the “corrected” box at the top and don’t forget to change the 1096 form if the correction affects the totals on this form.

IRS Penalties for Errors on Form 1099

Some bugs are easy to fix, while others are not. And the Internal Revenue Service puts fines for some, the amounts of which depend on:

  • The size of the company (larger employers face higher penalties).
  • The type of error.
  • The amount of time late in filing (higher penalties for no-shows at all or for “willful contempt”).

These are the errors that IRS penalizes:

  • Failure to submit the form on the due date.
  • Filing on paper when it is required to be electronically.
  • Failing to report a taxpayer identification number or reporting an incorrect tax identification number.
  • Not submitting a paper form that is legible.

You may also face penalties for:

  • Not having sent a copy of the form to the independent contractors;
  • Not including all the required information about your business as a payer;
  • Wrong or incorrect information.

Last conclusions

We hope you feel prepared, informed, and ready about the 1099 requirements, deadlines, and penalties. Tax software and programs like CheckMark and QuickBooks can help you do this without much hassle, so we highly recommend using them. On the other hand, you can have a paper or electronic version of the 1099 depending on your requirements; that is, if, for example, you are filing 250 returns or more per year, then it is recommended that you do the process electronically. If not, then the best thing to do is to file paper returns and mail them to the IRS.

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