Things Every Business Owner Should Know About Form 1099-MISC

Everything you need to know as a business owner filing a Form 1099-MISC!

Things business owners should know about Form 1099-MISC

Form 1099-MISC is an IRS form used to report miscellaneous compensation made to other self-employed people during the calendar year. It is also used to report payments made for rent, fishing boat proceeds, medical and health care payments, prizes, awards, and more. 

Who must file Form 1099-MISC?

Any individual who paid an amount with the following conditions to any other individual that is not an employee must file Form 1099-MISC with the IRS.

  • If paid a minimum of $10 in royalties or broker payments rather than dividends or tax-exempt interest
  • If paid a minimum of $600 in 
    • Rents
    • Prizes and awards
    • Other income payments
    • Medical and health care payments
    • Payments to an attorney
    • Crop insurance proceeds
    • Cash paid from a notional principal contract to any individual, partnership, or estate
    • Any fishing boat proceeds
    • Section 409A deferrals
    • Nonqualified deferred compensation

1099-MISC Form may also be used to report payments made for direct sales over $5,000 of consumer products for resale anywhere other than a retail establishment.

What are the copies for?

The payer must complete 5 copies of Form 1099-MISC. 

  • Copy A: filed with the IRS
  • Copy 1: filed with the state tax department
  • Copy B: furnished to the recipient
  • Copy 2: filed with the recipient’s state income tax return, when required
  • Copy C: for the payer’s records

What should be included in my Form 1099-MISC?

Along with financial reports, each Form 1099-MISC must include

  • Business information including EIN/SSN, name, and address
  • Recipient information including EIN /SSN, name, and address
  • Amount paid to the recipient
  • Federal income tax withheld 
  • State and local information such as state number and taxes withheld

Information that does NOT need to be included on the 1099 tax Form MISC includes reports of payments to corporations, employee income, and payments to tax-exempt organizations in the U.S., the District of Columbia, a U.S. possession, or a foreign government.

What is the filing deadline?

1099 MISC must be provided to recipients by January 31st. If you are reporting payments in boxes 8 or 10, the due date is February 15th. 

If you file by paper, the deadline is February 28th. The e-filing deadline is March 31st.

Can I get an extension?

If you need more time to file Form 1099-MISC, you can request an automatic 30-day extension by filing Form 8809.

Also, if you need to correct Form 1099-MISC, you can do so by filing Copy A and Form 1096 with the IRS. Just select “X” on the “CORRECTED” checkbox. Input the correct information and transmit it to the IRS. 

If the error was an incorrect TIN/ID, you must send a written statement to the IRS to correct the form.

Are there late penalties?

Under section 6721, the IRS will issue penalties for the following reasons

  • Filing after the due date
  • Paper form is unreadable by the machine
  • Using the wrong year form
  • Not using the right copy of Form 1099-MISC
  • Filing with an incorrect or missing TIN
  • Filing with incorrect information

If the form is less than 30 days late, the penalty is $50 per form. This increases to $100 if more than 30 days late.

Filing Form 1099-MISC is an important part of a business owner’s annual tax returns. With TaxBandits, you can be sure your form is filed safely and accurately. 

The 2023 1099-MISC deadline is approaching fast, so don’t wait! File your form today with TaxBandits.

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