Do You Need Help Filing Your 1099's?
Did your business make any payments that would require filing Form(s) 1099-NEC or other similar forms? Just a friendly reminder, you may be required to issue annual 1099 forms for payments made in the course of your trade or business for services.
Form 1099-NEC, formerly line 7 from Form 1099-MISC, is used to report payments for services provided TO your business by unincorporated (self employed, LLC, partnership) vendors and independent contractors when payment exceeds $600 for the year. All four of the following conditions must be met to be required to send form 1099-NEC
The payment must be made to a non-employee
The payment must be made for services to the trade or business
The payment was to an unincorporated entity (if payments are legal services they are required)
Payment or payments totalled $600 or more for the year
If you fail to provide correct payee statements, you may be subject to a penalty per statement up to certain designated maximum amounts. Please see the IRS Information Return Penalty Rates at the end of this document for specific information. In addition, the Internal Revenue Service (IRS) could assess 28% backup withholding to you for failing to file the required form.
If this applies to you, please respond to our email to start the next step. We will send a template back after you indicate you want us to assist you. In that template, please be sure to review each name, address, zip code, and Social Security number or federal identification number (EIN) for accuracy. We will provide more detailed instructions on filling out the template in the follow up email. We do recommend that you use IRS Form W-9 to obtain complete information from your vendors. Use of this form will shift IRS penalties for incorrect information from you to the vendor. As the requester, you are required to retain this form in your files. The link to the IRS website where you can obtain Form W-9 is: https://www.irs.gov/pub/irs-pdf/fw9.pdf.
We do charge for this service as we have to file forms with the IRS, the state, and mail forms to the recipients of the 1099. We charge a base fee of $15 per payee, regardless of the the number of forms filed. Then on top of that, we charge $15 for the first ten forms filed and each form filed after that is $10 per form. If you need to file 12 different 1099 forms, we would charge $15 base fee, $15 times the first ten forms or $150, and then $20 for the last two forms for a total of $15 + $150 + $20 or $185.
We will need this information by January 20th, 2022 AT THE LATEST so your Form 1099s can be filed in a timely manner. If you need help cleaning up your records in order to know how much vendors were paid, we are happy to help with that but please let us know ASAP so we can make sure we have everything we need. If you have any questions, please let us know.
Michael S. Pease, CPA
MSP Tax & Accounting
Commonly Used 1099 Forms
To report payments in the course of your trade or business
1099-INT (Interest Income) – Due to IRS by 1/31/2022
-----INTEREST (Box 1) - $10 or more of interest paid during a calendar year
1099-DIV (Dividend Income)- Due to IRS by 1/31/2022
-----DIVIDENDS (Box 1) – $10 or more of dividends paid from a C corporation (S corporations are generally not required to report dividends paid to shareholders on Form 1099)
1099-MISC (Miscellaneous Income) – Due to IRS by 2/28/2022 if filed by paper (3/31/2022 if e-filed)
-----RENTS (Box 1) - $600 or more of rents paid
-----ROYALTIES (Box 2) - $10 or more of royalties paid
-----OTHER INCOME (Box 3) - $600 or more of other amount paid not reported in another box
-----MEDICAL & HEALTH CARE PAYMENTS (Box 6) - $600 or more of payments to a physician, physicians’ corporation or other supplier of health and medical services
-----NONEMPLOYEE COMPENSATION (Formerly Box 7) – Reporting on separate form 1099-NEC for Tax Year 2021.
1099-NEC (Nonemployee Compensation) – Due to IRS by 1/31/2022
-----NONEMPLOYEE COMPENSATION (Box 1) - $600 or more paid for services performed for a trade or business by people not treated as its employees (e.g. fees, commissions, contract labor, directors’ fees, repairs/maintenance, attorneys’ fees, etc.)
Generally, payments to corporations do not require that Form 1099s be issued. However, you must prepare Form 1099s for payments to corporations for the following:
-----Medical and health care payments
-----Payments of attorneys’ fees
Information Return Penalty Rates:
IRS Information Return Penalty Rates - Link to full listing of penalties and rates: