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1099 Filing Requirements

1099 Misc Form


Why File
•  The most common reason for a business to file 1099-MISC forms is to show payment to someone who is not an employee of the business for services rendered -- usually payments to independent contractors and subcontractors and fees for corporate directors. Other transactions that may require the use of this form include the awarding of prizes and payment of rent.

What You Need
•  Any time you make an agreement with a sole proprietor or other self-employed person (not a corporation) to perform any type of service for your business, you are supposed to ask for their Taxpayer Identification Number (TIN) before paying them. The TIN will either be the federal Employer Identification Number (EIN) or, if they don't have an EIN, the sole proprietor's Social Security number. Have them fill out a W-9 form to provide this information before they begin work. If you rent space or equipment from someone, or if your business awards a prize of any sort, the W-9 form should be filled out before payment is rendered.

When to File
•  If you pay $600 or more in non-employee compensation, prizes or rent to any non-corporate entity during the calendar year, you are required to send that person or business a 1099-MISC form by Jan. 31 of the following year. In addition to the copy you provide to the person you paid, you must file another copy with the IRS. The IRS copies of all 1099-MISC forms must be sent by Feb. 28 with a 1096 transmittal form.


How to File
If you have only a small number of 1099s to issue or simply don't want to bother with them yourself, our firm offers this service. To file fewer than 250 forms you'll need to buy software and forms. If you have 250 or more 1099s to file, the IRS requires them to be filed electronically, using approved software.


•  The penalties are based on the date of filing the forms with the IRS as follows:

Within 30 Days of the due date    $30 per failure Maximum  $75,000
Before Aug 2nd                            $60 per failure Maximum $200,000
After Aug 1st                              $100 per failure Maximum $500,000

Minimum Penalty for Intentional Failure to File: $250 per failure with no Maximum

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