Did you know the 1099 deadline is fast approaching?!

Did you know the 1099 deadline is fast approaching?!

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If you paid $10 or more in gross royalties or $600 or more in rents or compensation to a person who is not an employee or to an unincorporated business you are most likely required to report the amount on a Form 1099. The payments have to be made in the course of your trade or business during the calendar year. Generally, any person, including a corporation, partnership, individual estate, and trust which makes reportable transactions must file a Form 1099. The type of reportable transaction determines the specific Form 1099 which must be filed. One of the most common forms 1099 issued is Form 1099-MISC. Form 1099-MISC is required for each person to whom you have paid during the year:

  • at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;
  • at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
  • any fishing boat proceeds,
  • Gross proceeds of $600 or more paid to an attorney during the year.

 

Until now, the deadline for filing 1099-MISC was February 28 for paper filings or March 31st for electronic filings. Beginning with 2016 forms, there is a new deadline of January 31st that applies to certain types of 1099s. If you are filing Form 1099-Misc and reporting amounts in Box 7: Nonemployee Compensation, then you will need to meet the new filing deadline of January 31. If you don’t have amounts in Box 7, then the deadline remains February 28 for paper filings or March 31 for electronic filings. However, you will need to have the Forms 1099 in the recipients’ hands by January 31st.

 

Failure to file these forms by the required deadline is considered a violation of IRS regulations and is subject to penalties. The Trade Preferences Extension Act of 2015 increased the penalties for failure to file correct information returns to $250 per failure, up to $3 million per calendar year. The penalties are doubled to $500 for intentional disregard. If the failure is corrected within 30 days of the required filing date, the penalty is $50 per failure up to $500,000. If the failure is corrected after 30 days but before August 1st. the penalty is $100 per failure up to $1.5 million.

 

So if you are a business owner, you should have an ongoing procedure for requesting a W-9 from any vendor you expect to pay more than $600 during a calendar year. And you should definitely take the filing of these forms seriously.

 

With only a few weeks to go until the new deadline to file certain 1099-MISC; please do not hesitate to contact our office if you need assistance with your filings.

 

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MKS&H

MKS&H is committed to providing personalized tax and accounting services while developing a deep understanding of you, your culture, and your business goals. Our full view of financial systems and the people behind them allow us create and evolve the best solution that will help you and your business thrive. The accounting experts and consulting professionals at MKS&H work together to help you achieve the financial results you want.

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