What is a 1099-MISC form?
The 1099-MISC is a tax information form generally used to report any payments made to a service provider or contractor. This helps the IRS track how much they can expect in taxes from contractors and those who are self-employed. Because they are technically a ‘business-of-one’ when contracting, independent contractors must handle their own taxes, whereas companies automatically withhold taxes for their traditional, W-2 employees.
Who files a 1099-MISC form?
The company or business owner that makes payments to the service provider or contractor for their services is required to report those payments to the IRS and also send a copy to the service provider or contractor. Many businesses that have previously filed the 1099-MISC to report non-employee compensation in Box 7 will use the 1099-NEC starting this tax year.
Who receives a 1099-MISC form?
The service provider or contractor receives a copy for their records and the IRS also gets a copy—either through electronic filing or paper mailing. Typically, companies are only required to send 1099-MISCs to service providers or contractors who’ve been paid $600 or more in a calendar year and are based in the US or US taxpayers.
Please note: The deadlines in this article were for the 2020 filing season. This page will be updated shortly with deadlines for the 2021 filing season.
The deadline to report 2020 tax forms to the IRS is March 1, 2021 if paper filing or March 31, 2021 if e-filing.
The deadline to provide 2020 tax forms to the recipient is February 16, 2021.
State filing considerations for 1099-MISC
Keep in mind that your state may also have requirements and separate deadlines for reporting 1099-MISCs and filing them. We recommend consulting a tax advisor to determine your state filing requirements.
Mailing vs. e-filing 1099-MISCs with the IRS
Anyone issuing more than 250 1099 forms is required to e-file with the IRS. Even if fewer than 250 forms are being filed, it is acceptable to e-file.
IRS penalties ranging from $50 to $270 per form may apply for each instance where you:
Don’t file an information return with the IRS by the deadline
Don’t provide the recipient a statement by the deadline
Don’t report a Taxpayer ID (TIN)
Report an incorrect TIN
Report incorrect information
Don’t provide the recipient with all required information
Don’t e-file with the IRS when required to e-file
Larger penalties may be enforced where there is evidence of intentional disregard or neglect.
This article is neither legal advice nor tax advice. We recommend that you speak to your tax advisor with any questions or concerns around tax reporting.