1099 Deadline is Quickly Approaching, Are You Ready to File with the Updated Form?

As the February 1st 1099 deadline approaches, it’s necessary to understand what they are, and who’s responsible for them. A 1099 is a tax form to report income that does not come in the form of wages and salaries to contractors who may provide services to your business. To provide a 1099 to your contractors, you’ll need a EIN (Tax ID number) or SSN for the organization/individual that you’re issuing a 1099 for, along with personal information. This information is collected using a W-9 form and should be filled out by any vendor that you’re making payments to. The payer is responsible for issuing 1099 forms to its 1099 eligible contractors.

The following vendors/payments must be provided with a 1099 at the end of the year if the payments throughout the year are equal to or greater than $600.00:

• Consultants
• LLCs (Partnerships only, S and C Corps are excluded)
• Payments to an attorney
• Fishing boat proceeds
• Prizes and awards
• Any nonqualified deferred compensation
• Rent payments
• Crop insurance proceeds
• Any other uncategorized payments

While there are many versions of this form, we will be focusing on the 1099-MISC and 1099-NEC. Which are most commonly used. This year 1099-NEC was created to focus on non-employee compensation (NEC) in addition to the standard 1099-MISC form. Information that was formerly placed in Box 7 on the 1099-MISC, now is required to be reported using this new form. Payments more than $600 on a calendar year cash-basis will be reported in Box 1 of the 1099-NEC for the following:

• Services performed by a non-employee (contractors/consultants)
• Cash payments for fish that are purchased from anyone in the trade business of catching fish
• Payments to an attorney

The 1099-MISC remains the reporting method to track all other miscellaneous payments made over $600, for example: prizes and awards, or rent payments.

Other income that is reported on the 1099-MISC include:

• Royalties received
• Payments in substitute for dividends or interest (dividends and interest are reported on another form of 1099)
• Crop insurance proceeds
• Deferred compensation (ex: if your deferred compensation exceeds allowed amounts for ROTH contributions)
• Other income like prizes and awards (this included stipends)

For accurate and up to date information on the 1099 deadline, feel free to go on www.irs.gov, or contact Insource Services at info@insourceservices.com or (781) 235-1490.