1099 Forms

It’s Time to Issue 1099s to Independent Contractors

Steven G. Albert, CPA, MST Tax Planning For Businesses, Business Management Leave a Comment

1099 Form

Now that we are in 2019, it’s time to issue 1099s for last year to your eligible subcontractors.

A Form 1099 is required for any non-employee compensation that was paid at least $600 via cash or check during the calendar year 2018 to a non-corporate (LLCs, partnerships, Trusts, Individuals) recipient. Generally, Forms 1099 are not required to be issued to corporations. A Form 1099 is, however, required to be issued for legal fees paid even if the recipient is a corporation.

Who qualifies as a "non-employee" to receive a 1099?

Generally, an independent contractor is someone who is not required to comply with instructors about when, where and how the work is to be done. They can work for multiple companies at the same time. They also assume risk based on client satisfaction. Examples of independent contractors include attorneys, accountants, repairmen, and marketing consultants. For a more comprehensive comparison of the criteria to determine independent contractor/employee status, read our post on employee vs independent contractor.

What is the deadline for issuing 1099s?

The Forms 1099 must be mailed to subcontractors by January 31, 2019. As long as the forms are sent before that date, the recipient may receive them after the 31st. However, it is recommended that these forms be issued as soon as possible.

What is the penalty for not providing a 1099 or missing the deadline to file?

The IRS has cracked down on businesses who don't file their 1099s. All corporations are asked, on their federal income tax return, whether they 1) issued any payments that would require them to file a 1099 and, 2) will file the required form. This means that failure to file could make you liable to perjury charges.

Filing your 1099s late can also incur a penalty between $50 and $270 per required 1099, depending on how late you file.

Need help preparing the Forms 1099?

If you would like these forms to be prepared for you, we’ll need you to provide us with the following information:

  • Full name
  • Social Security number (or FEIN)
  • Address
  • Total paid in 2018

Feel free to contact us to get started.

About The Author

Steven G. Albert, CPA, MST

Tax Partner | Shareholder, Managing Director, Tax Services Learn More>>

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