1099-MISC Tips

Guest Writer: Megan Gerhart, CPA

The 1099-Misc

You must file a 1099-MISC if you pay a contractor $600 or more in the prior year. Because you need information to fill out the form, the best way to start is to have all contractors and vendors supply a W-9. You do not need to complete a 1099-MISC for an S-Corporation or C-Corporation and the W-9 will have that information on it.
When you file a 1099-MISC form, you need to supply a copy of the form to the contractor or vendor, one copy is for the business, and the red copy is for the IRS. You can’t just print the red copy for the IRS because they have special machines to read them. The IRS can actually penalize you a send a form that can’t be scanned! But don’t worry, the IRS will mail you the forms for free in 8-10 business days.
When filing the copy with the IRS, you also need to provide a Form 1096 which is a summary information form. This is so the IRS knows how many forms are being submitted by your business, the amount of Federal income tax withheld, and the total amount of all the forms being submitted.
QuickBooks can file the 1099-MISC, but I’ve also seen many recommend other online providers, such as Track1099.com, as an easy way to file and send the forms, including an electronic receipt verification.
Local and online retailers also may have these forms in stock for sale, including Staples and Amazon.com.
For the 2019 tax year, penalties for failing to file these informational returns start at $50 per statement and can be as high as $540 per return or statement.

Here are the IRS links to the forms and penalty information.

Failure to File Penalties – https://www.irs.gov/government-entities/federal-state-local-governments/increase-in-information-return-penalties
Order forms from the IRS: https://www.irs.gov/businesses/online-ordering-for-information-returns-and-employer-returns

2019 1099-MISC w/Instructions: https://www.irs.gov/pub/irs-prior/f1099msc–2019.pdf

2019 Form 1096 w/Instructions: https://www.irs.gov/pub/irs-prior/f1096–2019.pdf

Megan Gerhart

Do you have any interesting tax stories? Let us know in the comments.

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