When is Form 1099-MISC Required?Businesses will need to fill out a Form 1099-MISC for persons, vendors, subcontractors, independent contractors, and others in the following circumstances:
$600 or more per year is paid for
- cash payments to fishermen
- crop insurance proceeds,
- medical and health care payments,
- prizes and awards,
- proceeds paid to attorneys,
- services (including parts and materials), and
- other types of payments not covered by another information reporting document.
- broker payments in lieu of dividends or tax-exempt interest, and
Expanded 1099-MISC Reporting Starting in 2011 for Rental Property Owners Has Been RepealedRental property would have needed to issue a 1099-MISC for payments relating to their rental properties beginning in the year 2011, but this requirement has been repealed by the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011.
Expanded 1099-MISC Reporting Starting in 2012 Has Been Repealed1099 reporting would have been expanded starting with the year 2012, but this provision has also been repealed by the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011. Prior to repeal, reporting would have been expanded to include payments made to corporations and as well as to include payments for goods and property. The 1099-MISC expansion was originally legislated as part of the Affordable Care Act.
Steps to Take to Prepare for 1099-MISC FormsYou should request that your vendors, contractors and other payment recipients submit to you a Form W-9. The W-9 will provide you with the legal name, address and taxpayer identification number for the vendor, which is the information you will need when preparing any 1099-MISC forms.
You should also keep track of your payments in your bookkeeping system. You will need to know whether the payment falls under any of the categories listed above for reportable payments, whether your payments to a particular recipient reaches the $10 or $600 threshold for reporting, and finally you'll need to know the exact amount you paid the recipient for the year.
Penalties for Filing Form 1099-MISC LateThe following penalties will be in effect for the year 2014:
- $30 penalty for filing a 1099 not more than 30 days late;
- $60 penalty for filing a 1099 more than 30 days late and before August 1;
- $100 penalty for filing a 1099 on or after August 1;
- $250 penalty for intentional failure to file.
These Form 1099-MISC penalties were increased as part of the Small Business Jobs Act, and have not been repealed.
Deadlines for 1099-MISC Forms
- Provide the recipient with his or her copy of the Form 1099-MISC by January 31 reporting income for the previous calendar year.
- Mail the Form 1099-MISC to the IRS by February 28.
- Or electronically file Form 1099-MISC with the IRS by March 31.