1099 Information

What is a 1099?

This is what the IRS likes to call an “information form” and it is used to report different types of income like: independent contractor income, interest income, dividends, government payments, retirement account withdrawals, and debt cancellations. 1099’s are required for any contractor who has been paid more than $600 in the filing year.

Important dates to remember

January 31^st, 2019 is the deadline for sending out 1099 forms to your contractors. It is important to have updated contact information including a valid mailing address so that the forms get sent to the right person. The easiest way to have the right information is to have the contractor fill out a W-9 which includes information such as the address and business EIN or personal social security number (required for 1099’s).

March 2^nd, 2019 (March 31^st if you electronically file) is the filing date with the IRS. if you send out 1099 forms to contractors then you must file that information with the IRS by these two dates depending on whether you paper file or electronically file.

Other Important Information to Know

Do 1099’s need to be issued to foreign workers?

If they are in fact a Non-US citizen and completed all work outside of the United States, you do not need to issue a 1099 to them. But, if they do perform some or all of the work inside the United States then a 1099 will need to be issued.

Do 1099’s need to be issued to corporations? 

No. the exception to this however is if it was for legal services. There are a few other exceptions to this that are highlighted on the instructions of the 1099 form. Generally, 1099’s should be issued to smaller companies that are a LLC (limited liability company).

Do 1099’s need to be issued to a contractor paid electronically (Paypal, Credit Card, etc.)?

No. The pay service is responsible for issuing 1099-k forms.

Do 1099’s need to be issued for personal payments?

No. Only services pertaining to your business are required for the 1099 process.

IRS Penalties

The penalties get stricter every year. For the 2018 filing year the penalties vary from $30-$100 PER FORM depending on how far past the deadline they are issued.

If you intentionally disregard filing 1099’s, you are subject to a minimum of $250 PER FORM and there is no maximum! Our advice: DO NOT ignore filing 1099’s. It is too big of a risk and has serious consequences!