In addition to the 1099 filings being more complicated for 2018, employer 1099s are under more scrutiny. The main reason is that IRS believes that there are a lot of Independent Contractors not reporting correct earnings resulting in not enough income tax being paid. The IRS has new filing rules that are being applied to 2018. Forms filed simply on the wrong media, if correct, can trigger penalties. Below you will find What You Need to Know for 1099-MISC Filings..
Here are four tips for filing 1099-MISC this year:
- Review vendor files very closely. By not issuing a 1099-MISC to a vendor that should have one could result in major problems for your business. But, should you send a 1099-MISC to a C or S Corp, or a self-employed individual that you paid less than $600.00 for the year is a harmless mistake.
- Independent Contractors must receive a 1099-MISC if they are not incorporated, meaning a Sole Proprietorship, Partnership, Disregarded Entity or LLC that has elected not to be treated as a corporation – and whom you paid at least $600.00 for the year. (Except Attorneys who do business as corporations must receive a 1099)
- Other noncorporate recipients of 1099s:
- Inside and outside corporate directors
- Outside accountants, lawyers and salespeople
- Auto mechanics/services stations that repair company cars
- Plumbers, electricians, painters, carpenters, tech consultants or officer cleaners
- Equipment lessors and repair people
- Office/company car lessors
- Another review is to double and triple check your Independent Contractors Tax Identification Number. If they do not match the IRS records, it can cause major issues. To avoid penalties you can use IRS Tax ID Number Matching Program before filing your forms. You can verify 25 on one screen.
- The 1099s are due to payees and the IRS by January 31. From 1096, Annual Summary and Transmittal of U.S. Information Returns, is due to IRS by February 28.
Want more? Looking for more bookkeeping information or tips? Check out our post on 3 Crucial Steps for Collecting Payments from Clients