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Reminder to File Your 1099s

1 year ago
Reminder to File Your 1099s
Form 1099 Filing Requirements and Due Dates

As we wrap up the year and  prepare to hit the ground running, here is a reminder of how, when and if you need to file Forms 1099-NEC and 1099-MISC. The following general guidelines are meant to assist you in either preparing the required information returns yourself or to help you gather the appropriate information so that we may prepare the forms on your behalf.  This information serves as an overview and does not detail all of the related filing requirements. If you have additional questions, please contact us.

The following are the general guidelines for issuing Forms 1099-NEC and 1099-MISC:

1.  In the course of trade or business, Form 1099-NEC must be issued to each individual or partnership you made payments of non-employee compensation of $600 or more.

2.  In the course of trade or business, Form 1099-MISC must be issued to each individual or partnership to which you paid for goods or services in 2024 as summarized below.

  • At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
  • At least $600 in:
    • Rents.
    • 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.
    • Any fishing boat proceeds.
  • In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

4.  Form 1099-NEC and 1099-MISC are required to be issued to the recipients by January 31, 2025.

5.  Form 1099-NEC is required to be filed with the IRS by January 31, 2025, whether filing by paper or electronically. Form 1099-MISC is required to be filed with the IRS by February 28, 2025, if filed by paper. If filed electronically, the due date is March 31, 2025.

6.  There are multiple potential IRS penalties for unreported (non-filed) Forms 1099-NEC and 1099-MISC. The penalties vary depending on the file date of the Forms.

7.  Under audit, the IRS can disallow the deduction for all payments whereby Form 1099-NEC and 1099-MISC was required but not filed.

8.  In order to gather accurate information required to be reported on Forms 1099-NEC and 1099-MISC, a completed Form W-9 should be obtained from all potential recipients before doing business with them. If completed Forms W-9 were not previously obtained, these should be gathered from applicable vendors as soon as possible.

9.  On September 18, 2019, California passed AB 5. Most workers are presumed to be an employee, unless the entity hiring the worker satisfied the three-factor test, known as the ABC test. In California, all three of the following conditions must be met in order to treat a worker as an independent contractor:

  • The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact
  • The worker performs work that is outside the usual course of the hiring entity’s business; and
  • The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

You can find the full instructions for 1099 filing here.

You can find the Form W-9 for collecting contractor information here.

If you have any questions regarding Form 1099-NEC and 1099-MISC requirements or filing procedures, please contact our office at (858) 483-7500 or via email at inbox@reasontax.com.

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