In this brief guide, we will answer this and several other common questions about 1099-MISC forms.
A 1099-MISC is one of the forms that the IRS uses to collect information from businesses related to payments they made in the course of doing business in a given year. There are at least nine types of 1099 forms total (e.g. 1099-S, 1099-B, 1099-C, 1099-A, 1099-R, 1099-K, 1099-INT, 1099-DIV, 1099-MISC), but the most commonly filed is the 1099-MISC.
Generally speaking, if you paid a contractor or subcontractor (including businesses) at least $600 in a calendar year, you are required to file a 1099-MISC form. Here is a list of payment types that trigger the required form. You do not have to file a 1099-MISC for payments made to employees. You also do not have to file this form for payments made to S-Corporations or C-Corporations, or if you made payments via credit card or PayPal!
January 31, 2020: This is the big due date to keep your eye on. This is the due date to send 1099-MISC (with Box 7 amounts, which is the most common) to Recipients as well as the due date to e-file with the IRS. For e-delivery to Recipients, you must have delivered the email notifying them their form is ready for them by this date. Keep in mind, you are required to e-file if you have 250+ recipients. Also, when e-filing Form 1099-MISC, Form 1096 is not required!
February 28, 2020: The due date to file on paper Form 1099-MISC for forms not including Box 7 amounts.
March 31, 2020: The due date to e-file Form 1099-MISC for forms not including Box 7 amounts.
August 1, 2020: The due date to e-file corrected 1099s to the IRS.
Many states support the combined Federal and State Filing Program (CF/SF) for 1099-MISC, and some states do not require state-filing of the form. Check out this article for more info on your particular state.
The time it takes to get your 1099-MISC forms sent to non-employees and filed with the IRS depends on how well you prepared throughout the year (LUCA takes care of this for all of its clients). One way to better prepare is to request a form W-9 from ALL new non-employees before you pay them for their services for the first time. (Trust us, a W-9 is your new best friend!) Some accounting systems (including Xero and Quickbooks Online) have a feature that will track 1099 payments for you throughout the year so that they are already calculated and easily reported when the time comes.
You need to collect a Form W-9 from independent contractors for whom you must file a 1099-MISC. The W-9 contains the recipient’s legal name, DBA (if applicable), tax entity type, legal address, and taxpayer ID. If they don’t have a taxpayer ID number, then you might have to start withholding taxes from their earnings. You also need to know precisely how much you paid each independent contractor.
As noted above, you can file both Copy A and Copy B of the 1099-MISC form in one of two ways: electronically or physically.
If you want to e-file with the IRS and e-deliver Copy B to the recipients (independent contractors), there are helpful services like Track1099 that will do so for you at a nominal cost. However, they still must be sent by January 31, 2020.
If you submit 1099's physically (by mail) to the IRS, you must also send in a Form 1096 (transmittal form), which is also due by January 31, 2020.
To save time with this process, you can work with a filing service who will do most of the heavy lifting. Or, you can work with a modern accounting back office like LUCA, who will make sure that all forms are accurately completed and timely filed.