Happy New Year! Now that the ball has dropped and the party is over, it’s back to business for most of us. The first thing on the list for myself and our clients, is the preparation and filing of 1099s. Every year, we start to get calls the last week of January to inquire about the 1099 process, and lucky for our accounting clients, we complete this process for them. Although the process may be confusing, we strongly urge you not to ignore it because the penalties can add up quickly.
Do you have a 1099 filing requirement?
If you made a payment of $600 or more to any one person/business during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. For more detailed information, please see 1099 General Instructions.
If, as part of your trade or business, you made any of the following types of payments, and the sum of all payments made to the person or unincorporated business was $600 or more in one tax year, you are required to file a 1099:
- Payments, in the course of your trade or business: (1099-MISC) (Note: It is important that you place the payment in the proper box on the form)
- Interest on a business debt to someone (excluding interest on an obligation issued by an individual) (1099-INT)
- Dividends or other distributions to a company shareholder (1099-DIV)
- Distribution from a retirement or profit plan or from an IRA or insurance contract (1099-R)
- Payments to merchants or other entities in settlement of reportable payment transactions, that is, any payment card or third party network transaction (1099-K)
If you do need to file 1099s, when are they due: Jan 31 – you can file paper or electronically (ASE Group files 1099s electronically to confirm receipt to both the recipient and the IRS, and also because it’s kinder on the environment).
When would you not be required to file a 1099?
You are not required to file a 1099 if any of the following situations apply:
- You are not engaged in a trade or business.
- You are engaged in a trade or business and the payment was made to another business that is incorporated, but was not for medical or legal services.
- You are engaged in a trade or business and the sum of all payments made to the person or unincorporated business is less than $600 in one tax year
Any weird things you should be aware of: If you file them yourself, and download versions from the IRS’s website, do not file Copy A of information returns. The official printed version of the IRS form is scannable, but the online version of it, printed from the website, is not. A penalty may be imposed for filing forms that cannot be scanned.
Need more information, or think you may be required to file 1099s with the IRS? Please contact us as soon as possible. We’re happy to help, and 1099 filings with ASE Group are extremely affordable! Contact us today for a quote.
Cheers to 2018!