In past years, the 1099-MISC deadline was February 28 for paper filing and March 31 for electronic filing. The accelerated filing date for forms with an amount in Box 7 is part of the IRS’ effort to reduce fraudulent tax filing and identity theft issues.
If none of the 1099-MISC forms you are required to file include an amount in Box 7 for non-employee compensation, then the due dates remained unchanged from prior years.
Failure to file Form 1099-MISC by the filing deadline can result in a penalty of $50, $100, or $260 per required 1099-MISC form, depending on the amount of time that has elapsed between the due date and actual date of filing. There can also be penalties imposed of more than $500 per required 1099-MISC if the IRS believes that someone intentionally avoided filing the required forms.
Form 1099-MISC is routinely filed by businesses to report amounts paid to individuals or unincorporated businesses for rents or services, such as maintenance, legal, or accounting services, during a certain tax year. The IRS requires filing of these forms to track items which are reported as expenses for the reporting taxpayer and therefore should be picked up as income for the receiving taxpayer on their tax return.
Form 1099-MISC is not required to be issued for amounts paid for supplies or merchandise items. Taxpayers do not have to file Form 1099-MISC if they are not engaged in a trade or business, or if they are engaged in a trade or business but the total of payments to each individual or business during the tax year is less than $600.
Filing Form 1099-MISC is often overlooked by individual taxpayers who are self-employed and report their trade or business income on Schedules C or F on their individual tax returns. Specifically, some items that might need to be reported on Form 1099-MISC includes payments made for farm labor or maintenance.
In order to facilitate the filing of these forms in a timely manner, we recommend sending IRS Form W-9 to each individual and business to which you make payments. This will allow you to capture their tax identification number, proper business name and address if you are required to send them a Form 1099-MISC at year-end. It is a good practice to have these forms filled out by everyone you make payments to, even if you are unsure you will be close to paying them the threshold amount by the end of the year.
The change in filing deadline for Form 1099-MISC is not the only new due date next year: there is also an accelerated filing deadline for Form W-2 and new 2017 due dates for certain tax returns. This means businesses will need to act quickly following the start of the new year to comply with the new deadlines. And hopefully, it will mean fewer cases of fraudulent tax filings.
If you have questions about whether you are subject to Form 1099 filing requirements or any other issues related to Form 1099, please contact your WK advisor at (573) 442-6171 or (573) 635-6196 to discuss in more detail.