While balancing multiple deadlines and different forms to file, you may miss a deadline or submit an inaccurate return. When that happens, the IRS will send you a notice of a 1099-MISC late filing penalty (or penalties) detailing what you owe to correct the situation.
This blog will help you understand the deadlines and penalties and how to reduce or remove them, which can help ease the burden of receiving an IRS notice.
Once you notice that you missed filing a 1099-MISC, you should file it immediately. Start by collecting all the required information: the recipient’s name, address, and TIN.
Understanding Form 1099-MISC
IRS Form 1099-MISC reports miscellaneous payments made in the course of business or trade in a tax year. Business taxpayers use this form to report payments such as rent, prizes, payments to an attorney, medical and health care payments, and more. As a result, the payer reports a range of payments and tax withholding from the contractor/recipient in Boxes 1 to 18.
At least $10 in royalties (box 2) or broker payments in lieu of dividends or tax-exempt interest (box 8).
At least $600 in:
- Rent (box 1)
- Prizes and awards (box 3)
- Other income payments (box 3)
- Generally, the cash paid from a notional principal contract to an individual, partnership or estate (box 3)
- Any fishing boat proceeds (box 5)
- Medical and health care payments (box 6)
- Crop insurance proceeds (box 9)
- Payments to an attorney (box 10)
- Section 409A deferrals (box 12)
- Nonqualified deferred compensation (box 14)
- Any business or person that withheld any federal income tax on independent contractors’ behalf under backup withholding rules, regardless of the amount withheld or the amount paid.
In addition, use Form 1099-MISC to report direct sales of consumer products totaling at least $5,000 to a purchaser for resale, excluding sales made at a permanent retail establishment (box 4).
Penalties for Filing Late
In 2019, the IRS imposed over $1.8 billion worth penalties for violation in information return, thus underscoring the importance of timely and accurate filing.
Here is a breakdown of penalties for late filing of Form 1099-MISC, based upon how late the form is filed:
- $60 per return if filed within 30 Days after due date
- $120 per form if you file more than 30 late days and by August 1st
- $310 per form if you file after August 1 or fail to file
- $630 per form or 10% of the income reported on the form if convicted of intentional disregard
How to avoid Late Filings Penalties?
First and foremost, step to avoid any further penalties is to start your filing right away. Gather all the required information and file your 1099-MISC online. Filing online is convenient and time-saving. Use an IRS-authorized eFiling service provider like Tax1099 to file in bulk or automate your process.
Request for time extension
To request an extension of time for filing an information return and providing payee statements, follow these steps:
Information Returns: Use Form 8809 – Application for Extension of Time to File Information Returns to request an extension.
Payee Statements: If you need an extension for furnishing payee statements to recipients, you can request it by faxing the extension of time request.
Things to Keep in Mind
To make sure that there is no delay in filing 1099-MISC in future:
- Set Reminders: Set calendar alerts or set reminders in project management software to alert you as any deadlines approach.
- Organize Your Records: Keep a record-keeping system in place to ensure easy access to the information needed for reporting and filing.
- Hire a Pro: If all else fails, consider hiring a tax professional or accountant to make filings for you.
File Your Form 1099-MISC with Tax1099
Simply follow the steps mentioned below to file 1099-MISC electronically with the IRS:
Step 1:
Create a free Tax1099 account or log in if you already have one.
Step 2:
Select Form 1099-MISC, enter the information, and review the form.
Step 3:
eFile it with the IRS and the state.
