1099 Deadline for 2019

The IRS has begun focusing heavily on taxpayer compliance with information reporting laws. Congress has sharply increased the penalties for compliance failures regarding the filing of Form 1099-MISC, Miscellaneous Income. The penalty for each Form 1099 missed is now $50 per return within 30 days of the due date, $110 per return before August 2^nd, $270 per return after August 1. For the intentional failure to file a Form 1099, the maximum penalty is the greater of $550 per return or 10% of the aggregate amounts of items required to be reported, with no limitation.

Rental Property Owners:  The Tax Cuts and Jobs Act offers a tax deduction of 20% for your qualified business income (QBI). Income from rental real estate income may qualify as QBI, and the 20% deduction.  Only income from a qualified trade or business is eligible for the QBI deduction.  To ensure that your rental real estate activity is considered a trade or business, as opposed to an investment, all landlords should issue to 1099s to vendors who are paid at least $600 for services performed. 

 

The 2020 filing due dates for the 2019 Form 1099-MISC are listed below.

Copy B to Recipients- The due date to file 2019 Form 1099-MISCs with the recipients is January 31, 2020.  The due date is extended to February 18, 2020, if you are reporting payments in box 8 or 14.

Copy A to the IRS- The due date to file the 2019 Form 1099-MISC with the IRS on paper or electronically is January 31, 2020, when you are reporting nonemployee compensation in box 7.  For any other type of income being reported, file by February 28, 2020, if you file on paper, or by March 31, 2020, if you file electronically.

 

Who must file:

You must file Form 1099-MISC, Miscellaneous Income, for each individual, partnership, or estate to whom payments are made in the course of your trade or business during the year. Corporations and S Corporations do not require a 1099-MISC, unless the corporation is for attorneys. The most common reportable payments are included below:

(1) At least $10 in royalties (box 2).

(2) at least $600 in rents (box 1), services performed by someone who is not your employee (including parts and materials) (box 7), prizes and awards (box 3 or 7), other income payments (box 3), medical and health care payments (box 6), etc. These do not apply to payments reported on your employee’s W-2.

(3) gross proceeds of $600 or more paid to an attorney, or to a corporation for attorney fees (box 14)

(4) direct sales of at least $5,000 of consumer products made to a buyer for resale anywhere other than a permanent retail establishment (box 9).

Nonprofit organizations are considered to be engaged in a trade or business.

 

Exceptions:

The most common payments for which you are not required to file a Form 1099-MISC include:

(1) generally, payments to a corporation, including S-Corporations;

(2) payments for merchandise, telegrams, telephone, freight, storage, and similar items;

(3) payments of rent to real estate agents;

For more specifics on these exceptions, please contact our office.

Information Needed to File Form 1099:

To properly complete Form 1099, you need to have the provider's name, taxpayer identification number (TIN) and address. You can request that information on Form W-9, Request for Taxpayer Identification Number and Certification, before work is done or payments are made.

If a provider does not supply you with a TIN, you are generally required to "backup withhold" 24% from any "reportable payments" and remit these withholdings to the IRS. 

Penalties for Failure to file Form 1099 :

If you fail to provide Form 1099s and cannot show reasonable cause for the failure, you may be subject to the following penalties:

(1) $50 per information return for returns filed correctly within 30 days after the due date, with a maximum penalty of $556,500 a year ($194,000 for certain small businesses);

(2) $110 per information return for returns filed more than 30 days after the due date but by August 1, with a maximum penalty of $1,669,500 a year ($556,500 for certain small businesses);

(3) $270 per information return for returns filed after August 1, with a maximum penalty of $3,339,000 a year ($1,113,000 for small businesses); and

(4) For the intentional failure to file a Form 1099, the maximum penalty is the greater of $550 per return or 10% of the aggregate amounts of items required to be reported, with no limitation.

Filing Responsibility:

This is intended as a summary of the filing requirements only.  For more information, please contact our office.