Form 1099 Requirements
FORM 1099 REQUIREMENTS:
When Do You Need to File Form 1099?
The following are the most common situations requiring filing of Form 1099:
You paid more than $600 for services, rents, director fees, prizes, or awards to nonemployees
You paid more than $10 in royalties
You paid dividends and other distributions on stock of $10 or more
You paid interest of $10 or more
This list is not all inclusive; please refer to the 1099 instruction booklet for more information.
Required Form W9.
If you are required to submit an information return, you must provide that person’s TIN (Taxpayer Identification Number)on the return. A penalty will be charged to those who cannot demonstrate that they made a proper attempt to obtain correct numbers. Use Form W-9 to request a TIN from a payee. Proper matching of a TIN and name is important. When using a SSN, the individual’s name must be reported as the recipient’s name, when reporting a TIN, the entitie’s name must be used as the recipient’s name to prevent future correspondence from the IRS. Backup withholding of 28% may be required if the payee fails to furnish his or her taxpayer identification number.
When to File?
Form 1099 must be furnished to recipients by January 31, 2014 for the 2013 reporting year. These forms must be filed with the IRS on or before February 28, 2014 or by March 31, 2014 if filing electronically.
There are penalties which can be imposed for failing to comply with reporting and filing requirements for Forms 1099, such as failing to file timely or electronically when required, failing to include all information required, or incorrect information included on the return. The amount of the penalty is based upon when the correct information return is filed:
- $30 per information return if correctly filed within 30 days
- $60 per information return if correctly filed more than 30 days after the due date but by August 1
- $100 per information return if filed after August 1st or not filed at all
Employers will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a non-employee. The employer may be able to reduce their liability using special rates in IRS Code Section 530 for the employee share of taxes. The employer must have filed Forms 1099 in order to get this tax relief.
Contact our accounting services department. We are glad to help!