The IRS is being more aggressive in assessing penalties for 1099 forms that are not filed or are filed late.  Penalties range from $50 to $530 per form, depending on the size of your company, how late the filing occurs and intentions regarding the original due date being missed.  In addition to penalties, the IRS is also assessing backup withholding on any 1099s that they find were not filed.  This can result in substantial amounts being assessed to the taxpayer.  If you are not sure 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 10.

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Taxpayer identification numbers:  When you are reporting payments made to a sole proprietor business, the name of the individual must be used on the 1099 instead of the business name.  The business name can be included as part of the address.  Either the sole proprietor’s social security number or their federal employer identification number can be used on the 1099.

 

Payment Types for Most Common 1099 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 2019 of the following types need to be reported on a Form 1099:

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

Payments that total $10 or more for 2019 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

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 2019 should be reported in Box 7 of Form 1099-MISC, even if paid to a corporation.

Since 2014, the same applies to veterinarians that provide services exceeding $600, even if 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 January 31, 2020.  A copy must also be filed with the Internal Revenue Service by January 31, 2020.  (Certain 1099s are due to the IRS by February 28, 2020)