On a scale from one to "I'll answer later" how much of a procrastinator are you? If you are reading this article I am guessing you are leaning toward the latter. That's completely fine though! As long as you pay attention to a few filing deadlines and due dates your procrastination activities are completely justified. So go ahead and watch the entire Netflix library, think about getting back in good shape for the hundredth time, or Zillow houses you cannot afford without feeling any shame whatsoever!
Stay tuned as we go over exactly when are 1099s due.
The various 1099 Forms
I want to focus on Form 1099-MISC today. Actually as of 2020 there is a new form that independent contractors will receive for income earned in a calendar year. It will be called Form 1099-NEC. Essentially in terms of reporting it serves the same purpose as the other information return, the Form 1099-MISC. So don't get shook up when you get a form that looks different this year! As a freelancer your earnings will largely be tied to any of these forms that you receive. The Form 1099 is a way to tell the IRS how much money you have received from someone for a variety of different reasons. Just for fun here are all of the different Form 1099's that you could possibly receive:
- Form 1099-A - Acquisition or Abandonment of Secured Property
- Form 1099-B - Proceeds From Broker and Barter Exchange Transactions
- Form 1099-C - Cancellation of Debt
- Form 1099-CAP - Changes in Corporate Control and Capital Structure
- Form 1099-DIV - Dividends and Distributions
- Form 1099-G - Certain Government Payments
- Form 1099-H - Health Coverage Tax Credit (HCTC) Advance Payments
- Form 1099-INT - Interest Income
- Form 1099-K - Merchant Card and Third Party Network Payments
- Form 1099-LTC - Long-Term Care and Accelerated Death Benefits
- Form 1099-MISC - Miscellaneous Income
- Form 1099-NEC - Non-employee compensation
- Form 1099-OID - Original Issue Discount
- Form 1099-PATR - Taxable Distributions Received From Cooperatives
- Form 1099-Q - Payments From Qualified Education Programs (Under Sections 529 and 530)
- Form 1099-R - Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
- Form 1099-SA - Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
As you can see there are many different forms you could receive for a variety of reasons. And guess what? The IRS of course has different due dates for the different 1099's, because one due date was just too easy. Before we get into due dates though let's establish whether or not you are required to file (or are expected to receive one), and better yet, what you actually have to file.
Do I have to file?
As a business owner/independent contractor you get many perks that come along with it, but trust me, you do get the short end of the stick with some things that you are now required to do. The Internal Revenue Service loves imposing requirements for our hardworking business people. For those of you that are fans of the beloved show The Office the IRS is the quintessential Toby Flenderson. They are going to make you file forms, remind you of filing requirements, and basically destroy all fun in the small business world. By the way, they will know if you don't file a 1099 form.
In the immortal words of Michael Scott I ask the Internal Revenue Service: "why are you the way that you are?" Since we will never get an answer to that question all we are left to do is comply with the rules that have been provided to us. So if you are paying a person or a business (AKA you are a payer) over $600 in a tax year and that person or business is not an employee of yours (AKA they will not receive Forms W-2) then you more than likely have a filing requirement for IRS Form 1099-MISC. Note that I said payments to a person or business: if the business you are paying is a corporation then you are off the hook, the 1099 rules only apply to individuals, sole proprietors, and partnerships. If the above applies to you then you are required to file information returns, AKA Form 1099-MISC. In addition to the Form 1099-MISC you also will need to file Form 1096 and make sure all your copies get to where they need to go (copy a, copy b, etc.). But since this article revolves around due dates I don't want to bore you with any additional rules.
When is Form 1099-MISC due?
Now that you are a knowledgeable filer of informational returns let's get down to the nitty-gritty. There are a few different rules relating to the due dates of Form 1099-MISC based on if you paper file them or choose to do it efile (AKA electronic filing). The filing date for paper filed 1099's (mailed in) is January 31st. It's one of the earliest tax deadlines so it is important to keep accurate records throughout the year to be able to meet this filing deadline. If January 31st falls on a weekend then the filing deadline is moved to the next business day. If you are married to the idea of paper filing your 1099's and you absolutely can't make that January 31st filing deadline then you can apply for a 30 day extension using tax form 8809.
Honestly though, that just adds a little extra headache of filing a 1099-MISC after the deadline and you might as well try to make the cut. With the new Form 1099-NEC that has come out you are required to furnish a copy of the Form 1099 to the IRS and to the taxpayer/recipient no later than January 31st. If you are issuing someone a Form 1099-MISC then you have a little leeway to file the form with the IRS. If choosing electronic filing then you are able to send the required information returns to the Internal Revenue Service by the end of February. You can find where you can eFile the forms on irs.gov.
Will I Be Penalized for Late Filing?
Uh oh. You procrastinated too hard. We all do it at some point. Unfortunately, procrastinating in this instance is going to cost you. Below is a breakdown of the penalties for late 1099 forms you can reference based on the dates you file them:
- Between 1-30 days late - $50 per form
- More than 30 days late but before August 1st - $110 per form
- After August 1st - $270 per form
- Intentionally neglecting to file - $550 per form
Notice the italicized text. Yes, it's PER FORM. So if you have to file one hundred 1099's and you do them after August 1st... You might take a page out of Michael Scott's playbook and declare bankruptcy to your coworkers. The good thing to know that if you eventually file your required information returns your maximum penalty will be $270 per form. Moral of the story, just keep up to date with your tax filings.
I hope that you have gotten a little more comfortable with the tax law after reading this article. Put January 31st on your calendars and resist the Netflix urges until you get the forms filed! If you have additional questions I encourage you to reach out to Keeper Tax or a tax professional for answers.
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At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email email@example.com with your questions.