Are you a business owner? Did you engage the services of an independent contractor and pay him or her more than $599 in 2015? Are you paying rent? Have you paid an attorney? You may need to prepare and send Form 1099-MISC before February 1st.The due date for filing the return with the IRS is February 29, 2016. The IRS is targeting non-filers this year and has doubled the penalty for the failure to file.
It is not uncommon to have a repairman work early in the year, pay him less than $600, then use his services again later in the year and have the total for the year exceed the $599 limit. Its good practice to always have individuals who are not incorporated complete and sign Form W-9 the first time you hire them. IRS Form W-9, Request for Taxpayer Identification Number and Certification is a way for you to obtain the information needed to file for your vendors. It provides you with verification that you have complied with the law just in case the vendor gives you incorrect information.
Attorneys are a targeted group as well. Payments to attorneys are generally required to be reported as well and are shown separately in Box 14. Compensation payments to non-employees are reported in Box 7. Rents are reported in Box 1. Other income is reported in Box 13. These are the most common reporting payments.
Don’t file the forms and you may not be allowed the deductions as well. Its common to have such expenses disallowed by the IRS upon examination. Argue the point and you can get hit for the penalties as well. We know as we handle IRS audits for our clients most every day!
This year, the penalties for the failure to file Form 1099 have doubled to $250 per informational return. The penalty is reduced to $50 if a correct, but late, return is filed no later than February 29, 2016 (or reduced to $100 if no later than August 1, 2016.
Filing the form is relatively easy. You can expect to pay an average of around only $25 per form for a paid preparer to remit the forms electronically. Filing electronically provides proof that the forms were filed correctly and on time.