We’re happy to present a new video on Form 1099s for Independent Contractors:
Prefer to read the text? Here you go:
Let?s talk 1099s.
Every business that makes payments during the year totaling $600 or more to any person or non-corporate entity (with certain exceptions) is required to file a Form 1099-Misc with the IRS and send a copy to the payee. Examples of people who you might need to issue a 1099-Misc include:
? Outside Contractors not paid as employees
? Physicians, dentists and other healthcare providers working as Associates
? Office cleaners and landscapers with unincorporated businesses
? Lawyers (because some have not paid their taxes and then claim attorney/client privilege when audited.)
Also, interest or dividend payments totaling $10 or more must be reported on Form 1099-Int or Form 1099-Div.
Please note the name, address, and identification number of the recipients are required on all 1099 forms. A good practice when hiring outside contractors is to have them complete a Form W9 before they start working for you. If they appear uncomfortable filling one out, that is a red flag to consider not hiring them to avoid future headaches with the IRS.
Also, please consider giving a copy of the W9 to your accountant. Be sure to inform the contractor that if they have an address change, they must contact your company to update their information. The 1099 might not be processed if an incorrect address is used.
Please note: ALL LINES must be filled out to complete a W9 correctly. The process will go much more smoothly if this is done correctly the first time!
For payments made during the year, a copy of Form 1099 must be mailed to each recipient prior to January 31st; a paper copy of the printed 1099 is required to be filed with the Internal Revenue Service (IRS) on or before February 28th; and lastly a copy of the 1099?s must be E-Filed to the Internal Revenue Service on or before March 31st.
Late Filing Penalties:
Penalties for filing your Form 1099s late are as follows:
? $30 penalty for filing a 1099 not more than 30 days late
? $60 penalty for filing a 1099 more than 30 days late but before August 1
? $100 penalty for filing a 1099 on or after August 1
? $250 penalty for intentional failure to file
All the above discussed forms and instructions, various 1099s, W9s and more are available on the IRS website: irs.gov.