1099's Are Due January 31. Now Is The Time To Get Ready.
Updated: Oct 27
All businesses that pay independent contractors $600 or more in a calendar year must file 1099s with the IRS by January 31st each year.
Who gets a 1099?
File Form 1099-MISC for each person or business to whom you have paid during the year:
At least $600 in Rents
At least $600 in Medical and health care payments.
At least $600 in Payments to an attorney.
File Form 1099-NEC for payments to non-employees for services of $600 or more in a calendar year.
This is a list of the common payments that must be reported. For the complete list see Instructions for Forms 1099-MISC and 1099-NEC.
Tip: New For 2020
Payments for Non-employee Compensation are no longer reported on Form 1099-MISC, they are now reported on Form 1099-NEC.
Form 1099-NEC isn't really new. The IRS just hasn't used it since 1982.
Who Doesn't Get a 1099.
Payments to a corporation
Payments to a limited liability company ONLY if they have certified to you on Form W-9 that they are taxed as an S-corporation or C-corporation.
This does not apply to payments for medical or legal services.
What is Non-employee Compensation?
If the following four conditions are met, you must generally report a payment as NEC.
You made the payment to someone who is not your employee.
You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
You made payments to the payee of at least $600 during the year.
Get a Form W-9 From All Vendors That Will Receive a 1099.
Use IRS Form W-9 to request from your vendors the information you will need to use to complete Form W-9.
Get Form W-9 here: About Form W-9, Request for Taxpayer Identification Number and Certification
The vendor must sign the W-9.
Penalties for not filing 1099s.
Not more than 30 days late: $50 per return or statement - $194,500 maximum
31 days late – August 1: $110 per return or statement - $556,500 maximum
After August 1 or Not at All: $270 per return or statement - $1,113,000 maximum
Intentional Disregard: $550 per return or statement - No limitation