With December upon us 2018 will be here before we know it. As we approach the end of the year our tax-planning attention will gradually shift to include the first IRS deadline of the New Year – Forms 1099 – which are due January 31, 2018, no extension available.
This relatively new deadline, which went into effect for certain tax forms filed last year, makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud, according to the IRS website.But the earlier date may still be confusing to filers and recipients.
1099s are information returns used to report various types of income to the IRS and the payee. There are several variations of Form 1099, with 1099-MISC the most common for small businesses to file. Often overlooked, the form-filling tends to be an unwelcome chore for filers. And the earlier deadline places businesses under additional time pressure as they wrap up the 2017 business year and launch into 2018.
Yet nearly all businesses will likely have a reason to file at least one 1099-MISC. There are many situations that trigger a requirement to file a Form 1099-MISC, and a complete list of those can be found on the IRS website here.
The most common situation that triggers a 1099-MISC filing requirement is payments made during 2017 of at least $600, in the course of a trade or business for:
- Services performed by someone who is not an employee. This includes all businesses that are not taxed as corporations (sole proprietors, partnerships, some LLCs)
- Any service from an attorney or law firm, regardless of their tax status.
All businesses, regardless of entity type, are required to file Forms 1099 if applicable. This includes sole proprietors and real estate rentals, which are reported on Schedules C and E respectively, as part of personal tax returns (Form 1040).
The best way for businesses to ensure that they have all the information needed to file Forms 1099-MISC is to have an accurate and current Form W-9 for each vendor.
With the year winding down, now is the time to review payment records and ensure Forms W-9 are on file. Having all the information readily at hand at the beginning of the year will make 1099 filing go more smoothly. Give us a call if you have any questions, require assistance with filing 1099s or about any other tax filing matter.
Author:Daniel Kretzenger | [email protected]
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