It’s January and the mandated 1099 filing season is upon us!
If filing the 1099-MISC form, you must not only send to the recipient by January 31st, but they must also be paper or electronically filed by that date with the IRS as well. Failing to do so may result in late filing penalties.
To help you process them accurately, here is some information you need to know about the 1099-MISC.
What is Form1099-MISC?
In most cases, a 1099-Misc is issued to report a payment over $600 made to a non-incorporated individual or partnership who performed a service for your business. For example, if your business hired a freelance worker to help with social media and they were paid at least $600, you must report these earnings if paid by check or ACH debit out of your checking account.
You need not report if the work was done by an employee, valued at less than $600, or if payment is made via credit card or through a third party such as Paypal. Payments made through a third-party processor will be reported by them on a 1099-K.
How to File Your 1099
In order to file a 1099 form, a W9 form should be requested (if not already on file) which will give the payee’s legal name with the IRS, tax identification number, and entity type. Based on the details provided, you’ll determine if a form is necessary to be submitted.
It is recommended you request the W9 form prior to having them perform any work for which you must pay. If your business has hired someone without their tax information, pause all work, send them a W-9 form immediately, and do not issue payment until the form is completed and returned to you. Of course if you’ve already paid them in 2019, it’s imperative you get this ASAP and file as necessary.
After you have their tax information, the rest is easy! Simply enter into your accounting software the person’s name, address, and tax ID number (SSN or TIN). When it’s time to process 1099s, you can run a report of subject payments and process your forms. You can purchase paper forms from office supply stores, or electronically file using various software options.
If you find keeping track of all your bookkeeping and tax information is not something you’d like to do, we would love to help. Contact us at (310) 534-5577 or [email protected] to see how we can make things easier.
