1099s Are Due - Penalties Have Increased!

Have you filed your Form 1099s?

·        Who is required to file 1099s? You are required to issue 1099s for payments you made in the course of your trade or business. You don't need to issue 1099s for payments made for personal purposes.

 ·        To whom are you required to send a 1099?  You'll send this form to any individual, partnership, Limited Liability Company, Limited Partnership or Estate to whom you have paid at least $600 for services (performed by someone who is not your employee, including parts and materials), rents, prizes and awards, or other income payments.

 ·        What are the exceptions?  You don't need to send 1099s to sellers of merchandise, freight, storage, or similar items.  You also don't need to send 1099s to corporations or real estate agents for rent payments, but the real estate agent must file a 1099 to report the rent paid to property owners. Lawyers are another exception; even if your lawyer is 'incorporated,' you are still required to send them a 1099 if you paid them more than $600.

 ·        What are the penalties? The penalties for not doing so can vary from $50 to $250 per form, depending on how long past the deadline the company issues the form. If a business intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $500 per statement (failure to file w/IRS $250 & Failure to furnish to payee $250), with no maximum.

 ·        Moving forward in 2017, make sure to get a Form W-9 from all of your vendors before you pay them. This is a lot easier than trying to secure the vendor’s address and EIN next January when 1099s are due.