How To File 1099 Misc After Deadline: Everything You Need To Know
Businesses, including single-person LLCs, self-employed freelancers or independent contractors, must report payments made to certain vendors and non-employee compensation to the Internal Revenue Service using the applicable 1099 form. If the form is not provided to the third parties and the IRS by the required deadlines there is a risk of being penalized.
A business owner must send all copies of Forms 1099-MISC or the new Form-NEC Copy A to the IRS by the due date and send Copy B and Copy 2 to any non-employees or contractors. Maybe you lost your 1099 or just plain forgot to file. Let's breakdown how to file a 1099-misc after the deadline.
Form 1099 Deadlines
The Form 1099 has the same deadlines for providing them to applicable third parties and filing them with IRS regardless of the type of 1099. This includes the Form 1099-NEC, 1099-MISC, and 1099-R. There are several different deadlines related to Form 1099 that are essential to understand. The deadlines are early in the year to ensure business owners and individual tax return filers have enough time to complete their tax filing accurately.
1099 Due Date to Recipients
The first 1099 deadline is when you must provide the 1099 to recipients. The 1099-MISC has the same deadline as all other 1099 forms. Normally, the deadline is January 31 but since in 2021 this was during the weekend, the deadline is moved to the next business day – February 1.
1099 IRS Filing Deadline
There are a few different deadlines to file form 1099 with the IRS depending on how you file. If you filing your 1099 to the IRS by mail, the deadline is February 1 for the 1099-NEC and March 1 for all other 1099s including the 1099-MISC. If you are e-filing, the deadline is still February 1 for the 1099-NEC but is moved to March 31 for all other 1099 forms.
What is Reported on the 1099-MISC?
The 1099-MISC changed for the 2020 tax year and is now only used to report miscellaneous income. Many people who used the 1099-MISC in the past will be using the 1099-NEC this year to report nonemployee compensation. As per the IRS website, you need to file a Form 1099-MISC for each person you paid during the year which falls into the following categories:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
- At least $600 in:
- Prizes and awards.
- Other income payments.
- Medical and health care payments.
- Crop insurance proceeds.
- Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
- Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
- Payments to an attorney.
- Any fishing boat proceeds.
- In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
How to File a 1099-MISC After the Deadline
Filing form 1099-MISC after the deadline, you will use the same process as if you were not past the deadline. To minimize the penalty you may receive, the fastest option is e-file with the IRS. This can be done through either a tax service provider, such as a CPA or directly through the IRS website.
What is the Penalty for Filing the 1099-MISC Late?
There are different tiers of filing penalties related to the 1099-MISC after the deadline. The tier you fall into depends on why there was a late filing.
The worst scenario is falling into the “intentional disregard” category. Intentional disregard occurs when you know, or should know, the filing requirements but choose to ignore them. To fall into this category, all three of the following situations must occur.
- You were required to file.
- You know or should have known that filing was a requirement.
- You consciously chose not to file or ignored the duty to file a 1099-MISC which was both correct and timely.
If you fall into this category, your penalty is $550 per return with no limitation as to what the total penalty is.
Date Based Penalties
If you do not fall into the intentional disregard category, your penalty per return is based on when you file it and maximum penalty is based on the size of your business. Note: All maximum penalties include inflationary adjustments so they may or may not be increased for 2021.
- Not more than 30 days late = $50 per statement
- Small Business (Gross receipts of $5 million or less) = Maximum penalty of $194,500
- Large Business (Gross receipts of $5 million or more) = Maximum penalty of $556,500
- 31 days late – August 1 = $110 per statement
- Small Business (Gross receipts of $5 million or less) = Maximum penalty of $556,500
- Large Business (Gross receipts of $5 million or more) = Maximum penalty of $1,669,500
- After August 1 or not at all = $270 per statement
- Small Business (Gross receipts of $5 million or less) = Maximum penalty of $1,113,000
- Large Business (Gross receipts of $5 million or more) = Maximum penalty of $3,339,00
Can You Request a Deadline Extension from the IRS?
In future years, if you are close to the deadline you can submit an extension request to the IRS. There is a separate process depending on if you need an extension to provide a copy of the 1099-MISC to the vendor/non-employee or if you need an extension to file the information with the IRS.
Extension for Providing 1099 Recipient Copies
You will need to send a letter to the IRS explaining why you need the extension. Along a reason for the extension, you will need to provide the following information for each recipient.
- Payer/Employer Name
- Taxpayer Identification Number
- Type of return (in this case it is the IRS form 1099-MISC)
- Reason for the delay
- Specify the request is an extension to provide statements to recipients
- Signature of the payer/duly authorized person
Extension to File the 1099-MISC with the IRS
You will need to complete Form 8809 (Application for Extension of Time to File Information Returns) and it must be postmarked prior to the deadline.
For the 1099-MISC you will receive one automatic 30-day extension. If you need an additional 30 days, then you will need to meet one of the five approved reasonable causes for the second extension.
- You (or your business) suffered a catastrophic event in a federally declared disaster area which resulting in you being unable to file timely.
- The operation of your business was impacted by fire, casualty, or a natural disaster.
- The person responsible for filing the 1099-MISC was unable to file timely due to death, serious illness, or unavoidable absence which impacted the ability of your business to file.
- This is your first year operating the business.
- You did not receive the necessary data on a payee statement (such as a K-1, Form 1042-S, or statement of sick pay) in time to prepare a correct information return.
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