For every employee and nonemployee that an employer hires and pays compensation outside of the usual wage or salary, a 1099-MISC form must be completed. The 1099-MISC form reports income earned by independent contractors, self-employed, government payments, interest and dividends, debt cancellations, and retirement account withdrawals.
The IRS also requires nonprofit organizations, trusts, cooperatives, and federal, state, and local government agencies to report payments through 1099-MISC forms.
Let’s walk through the important dates, penalties related to the 1099 form, and learn how you can file your 1099-MISC forms accurately and efficiently.
One of the most basic penalties that can be easily avoided is submitting forms on time.
Deadlines to know for Copy A of Form 1099-MISC:
- January 31st of the following year Box 7 nonemployee compensation payments are reported (paper and electronic)
- The final day of February of the following year when not reporting non-employee compensation in Box 7 (when filing by paper)
- March 31 if filing electronically when not reporting non-employee compensation in Box 7.
In recent years, penalties have increased across the board. If you’re hit with penalties for misfiling 1099 forms, you’ll have to resolve them quickly and efficiently. The later the returns are filed, the greater the fine grows.
For small businesses grossing $5 million or less, the penalty for returns filed 31 days late is $110 per return. The max on these penalties taps out at $1,113,000 for small businesses if filed after August 1st.
For large businesses grossing more than $5 million, 31 days late on your returns will also get you a $110 late fee, with a max of penalties at $3,339,000 if filed after August 1st.
IRS Code Section 6721 may apply if Information Returns are not filed by the due dates. These penalties can be imposed if you do the following:
- Fail to file a correct information return by the deadline without a reasonable cause
- File on paper when electronic filing is required
- Fail to report a Taxpayer Identification Number (TIN) or an incorrect TIN
- File paper forms that are not machine-readable
The best way to avoid penalties on 1099 forms is by using an efficient e-filing process that will help you to submit your forms accurately and on time.
If you’re filing a large number of forms, using a bulk upload service can help to ease the process. The more forms that are misfiled, the higher the penalty. eFile360 can also help to ensure that your information matches up with TIN checking in order to prevent delays and potential penalties.
Get familiar with the types of forms you’ll need.
Form 1098 reports the amount of interest and related expenses paid on a mortgage during the tax year.
We support the following 1099 forms:
Find out more about 1099 filing penalties here. If you’re feeling shaky on the current tax rules, you don’t have to worry. Our e-filing programs are updated with the current year’s tax information to help you to comply with the requirements. We do not provide tax advice, but we’re versed in the specific areas of the 1099 form and understand the specifics, so we’re here to help.