Taxseer provides a quick and easy form 1099 MISC online filing options to the filers through the online forms that mimic the paper forms. The highly sophisticated Taxseer’s editable online forms have changed the way the filers have been traditionally filing the paper forms and reduced the filing time to minutes instead of hours and days. We also provide the e-file of the extension form 8809 if the filer is not ready to file form 1099 MISC before the IRS due date. This blog provides the critical information that the filer must know before they e-file form 1099-Misc, Miscellaneous Income.
What should be reported on Form 1099-Misc, Miscellaneous Income?
Filers are expected to file Form 1099-MISC for each person to whom they have paid during the year:
- at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;
- at least $600 in:
- services performed by someone who is not your employee;
- prizes and awards;
- other income payments;
- medical and health care payments;
- crop insurance proceeds;
- cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish;
- generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
- payments to an attorney; or
- any fishing boat proceeds,
In addition, 1099-Misc form should be used to report the direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. Form 1099-MISC must be filed for each person from whom the filers have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.
Trade or Business reporting in Form 1099-Misc
Form 1099-Misc filing should only report the payment made in the course of trade or business if it is operated for gain or profit and no personal payments should be reported. Nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Other organizations subject to these reporting requirements include trusts of qualified pension or profit-sharing plans of employers, certain organizations exempt from tax under section 501(c) or (d), farmers’ cooperatives that are exempt from tax under section 521, and widely held fixed investment trusts. Payments by federal, state, or local government agencies also are reportable.
Exceptions for Form 1099-Misc reporting
Some payments, although they may be taxable to the recipient, do not have to be reported on Form 1099-MISC. Payments for which a Form 1099-MISC is not required include all of the following.
- Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation).
- Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
- Payments of rent to real estate agents or property managers. However, the real estate agent or property manager must use Form 1099-MISC to report the rent paid over to the property owner.
- Wages paid to employees (report on Form W-2, Wage and Tax Statement).
- Military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services (report on Form W-2).
- Business travel allowances paid to employees (may be reportable on Form W-2).
- Cost of current life insurance protection (report on Form W-2 or Form 1099-R, Distributions From Retirement Plans, Insurance Contracts, etc.).
- Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, Coverdell ESAs, and ABLE (529A) accounts), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government.
- Payments made to or for homeowners from the HFA Hardest Hit Fund or similar state program (report on Form 1098-MA).
- Compensation for injuries or sickness by the Department of Justice as a public safety officer disability or survivor’s benefit, or under a state program that provides benefits for surviving dependents of a public safety officer who has died as the direct and proximate result of a personal injury sustained in the line of duty.
- Compensation for wrongful incarceration for any criminal offense for which there was a conviction under federal or state law.
Due date for 1099-MISC
1099-MISC form with Box 7 should be filed by Jan 31 and the rest could be filed before March 31. Any e-Corrections can be done no later than Aug 31.
If your company needs more time to file your 1099-series forms, then you need to apply for an extension using Form 8809. There are two types of extensions:
- Extension for filing 1099 forms with the IRS
- Extension for delivering 1099 forms to recipients
If you plan to file Form 1099-MISC reporting non-employee compensation payments in Box 7, you must request an extension no later than January 31.
The penalty varies from $30 to $100 per form ($500,000 maximum per year), depending on the delays made by the company to issue the form. For deliberate disregard to the requirements to provide a correct recipient/payee statement, the company may be subjected to a minimum penalty of $250 per statement with no maximum limit.
Taxseer is a leading IRS-authorized e-file service provider offering you the best cloud-based solutions to perform online filings of Forms 1099-Misc, other 1099 series, W-2, ACA (1095-B & 1095-C), 2290, 8849, 8809 and many more. We provide Wizard-driven e-filing for guided and error-free submissions and extend the security, intelligence, availability, and agility of the tax solution on the cloud. SSL-encrypted connections are used for transferring sensitive information and to provide a very safe environment for clients. As part of our commitment to making e-filing easy and convenient, we are always available.