1099-Misc Filing Date Deadline is January 31st
What is Requirement to issue a 1099-MISC Form?
The 1099-Misc filing date is January 31, 2019. Payment to independent contractors is known as non-employee compensation or NEC. There are specific requirements when you issue a 1099-MISC form. The IRS requires a business to issue a Form 1099-MISC to avoid penalties. Also, issuing the 1099-MISC allows your to deduct the expenses for the person’s labor and expenses, should you experience an audit.
- When you engage the services of an individual (independent contractor) in your business
- The individual does not meet the definition of an employee
- You pay him or her $600 or more for the calendar year
Why did the IRS Change the 1099-MISC Filing Date Deadline?
The change for the 1099-MISC filing date deadline was due to so many fraudulent tax returns were being filed right after e-filing opened up in January. And, since the old 1099-MISC due date was at the end of February, the IRS had no way to verify NEC. That left the door wide open for scams against the IRS; thereby, costing millions of dollars in erroneous earned income tax credit (EITC). To plug that hole, the IRS moved the filing date for NEC 1099-MISCs to January 31 and no longer releases refunds for returns that include EITC until the NEC amounts can be verified.
Thus, the due date for filing 2018 1099-MISC forms for NEC is now January 31, 2019. That is also the same due date for mailing the recipient his or her copy of the 1099-MISC.
Did You Ask for a W-9 From Your Contractor?
It is not uncommon to have a repairman out early in the year, pay him less than $600, use his services again later in the year, and have the total for the year be $600 or more. As a result, you may overlook getting the necessary information from the individual to file the 1099s for the year. Therefore, it is good practice to always have individuals who are not incorporated complete and sign an IRS Form W-9 the first time you engage them and before you pay them.
First, having a contractor a W-9 will give them a fair warning that you intend to claim the expense on your tax return. Next, the contractor will know to expect a 1099. And, in some cases, if the expense is the difference between over and under $600, the vendor may just give you a break on the cost of their service. Of course, the IRS expects the contractor to report all aggregate earnings regardless if the expense for you personally was over or under $600.
How does a W-9 protect me when I hire a contractor?
It is a good practice to review the W-9 and make sure it is complete and has a valid signature. Having the Form W-9 for all independent contractors and service providers will eliminate any oversights and protect you against IRS penalties and conflicts. If you have been negligent in the past about requesting a W-9, it would be a good idea to establish a procedure for getting each non-corporate independent contractor and service provider. Again, have them fill out a W-9 and return it to you before going forward with any work or service you have done.
IRS Form W-9, Request for Tax Payer Identification Number and Certification
The government provides the IRS Form W-9, Request for Taxpayer Identification Number and Certification here. This form helps you to obtain the vendor’s data you’ll need to accurately file the 1099s. It also provides you with verification that you are in full compliance with the law just in case the vendor gave you incorrect information. The contractor is responsible to sign the form, verifying the information given is correct. Again, we strongly recommend that you have potential vendors complete a Form W-9 prior to engaging in business with them. The W-9 is for your use only and is not sent over to the IRS.
Penalty for Failing to File a Form 1099-MISC
The penalty for failure to file a mandatory information return such as the 1099-MISC is $270 per information return. However, you could have a lower penalty in the following scenarios:
- $50 when you file a correct but late information return no later than the 30th day after January 31, 2019.
- $100 for returns when you file after the 30th day but no later than August 1, 2019.
Must I file the Form 1099-MISC Electronically?
The IRS requires you to file the Form 1099-MISC electronically when you have 250 or more information returns.
How do I avoid a penalty when I file the 1099-MISCs?
In order to avoid a penalty, copies of the 1099-MISCs sent out for 2018 need to be sent to the IRS by January 31, 2019. You must submit the forms on magnetic media or on optically scannable forms (OCR forms).
Note: Other reporting that require a Form 1099-MISC include other types of payments, including rent and royalties. You report the information for independent contractors in Box 7 of the 1099-MISC. Oh, and when you use box 7 on the form, the the dates previously mentioned in this article apply. When you use the 1099-MISC to report income other than that in box 7, the due date to the form’s recipient is January 31, 2019, while the copy to the government is due by February 28, 2019.
Do you still have questions about submitting a Form 1099?
Now that you are aware of the 1099-MISC filing date, you may still have questions. If so, I invite you to call me, Alex Franch, BS EA, a call at 781-849-7200 or email us at email@example.com. Joseph Cahill and Associates/Worthtax firm prepares 1099s for submission to the IRS along with recipient copies and file copies for your records. Please feel free to use the 1099 worksheet to provide this office with the information necessary to prepare your 1099s. With tax season quickly approaching in a little over a month, we encourage you to be proactive and set up your appointment today! We are also offering a variety of client discounts to save you money.
Alex Franch, BS EA
Alex is a Tax Specialist and Partner at Joseph Cahill & Associates / WorthTax. He has a diverse background including a Bachelor of Science from Boston College in Mathematics and extensive military service. Alex is an Enrolled Agent and has a decade of tax preparation experience. He is passionate about serving businesses with tax and financial planning.
Sources and Resources
- IRS Tax Guidance: S Corporation Stockholder, Reasonable Compensation
- 12 Common Tax Problems to Avoid
- Tax Reform is Confusing Part 2
- Tax Reform is Confusing! Here is a Side by Side Comparison Part 1
- Learn About This Year-End Tax Strategy
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- 529 Plan: Higher Education, Learning the Hard Way
- Minimizing Tax on Social Security Benefits
- Employee Business Expenses: Tax Reform Suspends Tax Deduction
- Preparing Taxes for 2018 and Beyond