Are you an entrepreneur so busy with running your business that you sometimes forget about filing deadlines? Did the 1099 filing due date pass you by and you just realized you owe forms to your freelance contractors and/or other vendors?
The good news is that there are three different deadlines. January 31st is usually the date forms are due to contractors (if mailed, they must be postmarked no later than this date to be considered timely). In 2016, the date was extended to February 1st since the 31st was a Sunday. But if you realize before the IRS filing deadline (explained below), you won’t receive a fine.
If mailing copies A to the Internal Revenue Service, they must be postmarked this year by February 29th to be considered mailed on time. If you file electronically, forms must be received no later than March 31. Based on these dates, you still have time to file to avoid being penalized.
Penalties may be assessed if you fail to file form 1099 by the due date and you cannot show reasonable cause. The penalty applies not only if you fail to file timely, but also if you fail to include all information required to be shown on a 1099 return, or if you include incorrect information on a return. The penalty also applies if you file on paper when you were required to file forms electronically, you report an incorrect TIN (Tax Identification Number) or fail to report a TIN, or you fail to file paper 1099 forms that are machine readable.
The amount of the penalty is based on when you file the correct information return:
$15 per return if you correctly file within 30 days of the deadline; the maximum penalty is $75,000 per year ($25,000 for small businesses).
$30 per return if you correctly file more than 30 days after the due date but by August 1; the maximum penalty is $150,000 per year ($50,000 for small businesses).
$50 per return if you file after August 1 or you do not file required information returns; maximum penalty $250,000 per year ($100,000 for small businesses).
So if you haven’t yet processed forms for your vendors, it’s time to review who is subject and prepare all necessary 1099s. If you need more information on who is the subject or how to fill in the forms correctly, see the links below for posts sharing this information. And if you don’t want to process them yourself, contact us right away to assist you. We can be reached at 310-534-5577 or [email protected].
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