The IRS is being more aggressive in assessing penalties for 1099 forms that are filed late or not filed at all.  The penalties range from $50 to $530 per form.  The penalty depends on the size of your company, how late the filing occurs, and the intentions for missing the original due date.  In addition to penalties, the IRS is also assessing backup withholding on any 1099s that they determine to be unfiled.  This can result in substantial penalties and fines assessed to the taxpayer or entity.   If you are uncertain if a 1099 should be filed, the safest approach is to file it.

Working with TDT on your 1099 Forms

If you would like us to prepare your 1099s, please return the proforma forms sent in the mail or contact our office by January 11.

Please provide the following:

  • Recipient name
  • Recipient Address
  • Recipient SSN/EIN
  • Amount paid & type of payment

Form 1099-NEC is new for 2020 and is to be used for nonemployee compensation that was previously reported on form 1099-MISC, Box 7.

Payments that total $600 or more for 2020 of the following types need to be reported on a Form 1099-NEC:

Commissions, fees, machine hire and subcontract labor to non-employees (include construction contractors even if the payment is mostly for materials)

Payments to attorneys:  Fees paid to corporations for legal services are not exempt from reporting.  All payments for attorney fees totaling $600 or more for 2020 should be reported on the 1099-NEC, even if paid to a corporation.

 

Payment Types for 1099-MISC Recipients

Payments which require filing a 1099 are payments in the course of your trade or business to individuals, trusts, estates and partnerships (payments to corporations need not be reported with the exception of attorneys, medical providers and veterinarians).

Payments that total $600 or more for 2020 of the following types need to be reported on a Form 1099:

  • Rents
  • Premiums
  • Prizes or awards

Payments that total $10 or more for 2020 of the following types need to be reported on a Form 1099:

  • Dividends (most but not all distributions from an S corporation are excluded)
  • Royalties
  • Interest

 

The same applies to veterinarians and medical providers for which services exceed $600 for the calendar year, even if they are incorporated.  These payments should be listed in Box 6 (medical and health care payments).

 

Iowa Department of Revenue requires you to electronically file state copies of the 1099 forms if the 1099s contain Iowa tax withholding.  If you need assistance with other state filing requirements, contact TDT.

A copy of the 1099 must be furnished to the recipient on or before February 1, 2021.  A copy must also be filed with the Internal Revenue Service by February 1, 2021.  (Certain 1099s are due to the IRS by February 28, 2021)

A copy of the 1099-NEC must be filed with the IRS by February 1.  Other 1099 forms generally must be filed with the IRS by February 28.