What time is it? **1099 time**!!
Hello my sweet business babies! As we speed into the new year it’s time to start getting ready for your year end reporting requirements.
If you paid for services for anyone who was not an employee, you may be required to file a form 1099-NEC. The 1099 series are “reporting” forms, not tax forms. They are due on January 31, 2023. The 1099-NEC is used to report compensation to non-employees. Any person you paid $600 or more over the calendar year 2021 should be issued a 1099-NEC. You will need to have that person’s name, address and social security number.
This is a really good time to review your Contract Labor, Outside Labor or Subcontractor expense accounts. Make sure you have the required information for anyone you have paid $600 or more. If you are missing some info, get it now! Don’t wait until the last minute!
I can help you prepare your 1099s and make sure they are in compliance. It is not a difficult form, but it is so often done incorrectly that the IRS changed the form from the 1099-Misc in 2020.
If you have any questions about your 1099s or if you need to file, please let me know!
What happens if I don’t file any 1099s?
This could be an audit point. The IRS will compare the amounts you have claimed for contract labor with the 1099s you have filed. If you don’t file those 1099s your labor cost may be denied. That means you will pay the payroll tax and income tax on those amounts.
What if I don’t have all the information I need to file the 1099?
Best practice is to get the SSN and address for everyone BEFORE you start paying them. But if you don’t have it, and they refuse to give it to you now, you should file the 1099 with as much information as you have. Generally the IRS is able to match up the 1099 to what they have and all is well (even though you will get a letter). But it is much MUCH better to file correctly in the first place. And if someone is refusing to give you basic information they might not be the best person to be working with.
You can easily get all the information needed for 1099 reporting by having your worker complete a W-9.
What if I file my 1099s late?
You may get fined. I have not seen it happen yet but it is possible.
Can you help me with my 1099s?
Yep. I do charge for 1099 prep: a base fee of $25 for electronically filed 1099s that increases as the total number of 1099s increases. If I have to redo or amend there may be additional charges.