We are getting down to the wire, the deadline to file the Form 1099-NEC is this Monday. With just a few days before the deadline and a daunting amount of work ahead of you, it may be tempting to just file your forms late.
You may be wondering if the IRS will even notice. Of course, they will notice, they’re the IRS! Before you throw in the towel on on-time filing, let’s take a look at the penalties that you could become subject to.
About Form 1099-NEC
Before we dive into penalties, let’s cover some background information on Form 1099-NEC. This form was originally created in the 1980s, but it has been reactivated for Tax Year 2020 and beyond. Its sole purpose is to report non-employee compensation. This form will replace Form 1099-MISC, box 7, where this information has been reported in the past.
If you have employed an independent contractor and paid them $600 or more, you are required by the IRS to file a Form 1099-NEC for them and furnish them with a copy.
Form 1099-NEC is very important to your independent contractors, as they will need this form when it comes time to complete their income tax returns.
When is the deadline to file Form 1099-NEC?
The deadline to file Form 1099-NEC is January 31, 2021. Since this date falls over the weekend this year, the deadline to both file these forms with the IRS and furnish employee copies is February 1, 2021.
What are the penalties associated with Form 1099-NEC?
The following errors on Form 1099-NEC must be corrected to avoid 1099 penalties:
Paper filing when you were required to e-file
Reporting an incorrect TIN
When it comes to late filing, the penalty will be determined by the amount of time that has passed since the deadline.
For example, if you file your forms late, but within 30 days of the original deadline (February 1, 2021), you could be charged up to $50 per form.
If you file 1099-NEC anytime past 30 days late and August 1, 2021, the penalty could be as high as $110 per form.
If you file Form 1099-NECs after August 1, 2021, you could be penalized up to $270 per form.
After this point the IRS may conclude that you are intentionally disregarding your filing requirements, therefore they can penalize you up to $550 per form.
Don’t start out 2021 with IRS penalties, especially when they are avoidable, even at the last minute! With TaxBandits you can complete your Forms 1099-NEC quickly and efficiently.
You can easily complete your federal and state e-filing of Form 1099-NEC with TaxBandits easy process and helpful features.
When it comes to recipient copies, you can opt-in to postal mailing. Our USPS validation process ensures that your recipient copies are sent to the correct addresses. Looking to go paperless this year? You can give your independent contractors access to print and download their forms using our secure Online Access Portal.