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8 Things to think about before 1099 Season

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8 Things to think about before 1099 Season

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  1. 8 Things to Think About Before 1099 SeasonFrom:

  2.  1. Have you collected all of your W-9s? • If you are required to file an information return, such as a 1099-MISC, the IRS requires you to collect the Taxpayer Identification Number (TIN) for the person you paid. You then use the information collected on the W-9 to complete the information return filing requirement. The IRS provides a pdf of Form W-9 here, or you may use other tools to collect the W-9 from vendors and contractors. Electronic Collection of the W-9 information is perfectly acceptable as well.

  3. 2. Have you verified the TIN and name combinations provided to you are correct? • It’s very easy to enter the information collected from the W-9 incorrectly into your accounting software. Sometimes vendors provide incorrect information, such as providing a “doing business as” name instead of their legal entity name. Other vendors do not want the income reported and provide incorrect information intentionally. You can help protect yourself or your clients by proactively verifying TIN and name combinations received on the W-9 form.

  4. 3. Have you noted that the vendor is a 1099-qualifying vendor in your software? • Most software where you track vendor payments has a method for noting that the vendor should receive a 1099. In some software, that could be a checkbox on the vendor record. Others may have a way to note the default form and box number in the vendor record. Still others may track the payment itself to note if it is a 1099 payment. Be sure to select the 1099 tracking option in your software.

  5. 4. Do you know which box to report the vendor amounts to? • The most commonly-filed 1099 form is the 1099-MISC. For the IRS, nine of the boxes can be used to report payments made to vendors. Those boxes include the “usual” box 7 for nonemployee compensation, but they also include others that are used less frequently, such as box 5 for fishing boat proceeds or box 13 for excess golden parachute payments.

  6. 5. How will you get the information from your software into your forms? • Consider a tool that integrates with your accounting software to bring the data over. You click a few buttons and the Payer, vendor, and amount information populates the 1099 form for you. Make edits if needed, and then click a few more buttons to provide copies to recipients, e-file to the IRS and state agencies, and store the information in the cloud.

  7. 6. How will you provide copies to the recipients? • Traditionally, companies mailed paper copies of the 1099 forms to their vendors. Now, many people prefer to receive that information in an electronic format. The IRS allows Payers to send electronic copies to the vendor as long as the vendor has opted in to receive the information electronically. There are specific steps to accept that opt-in and to allow the recipient to revoke their opt-in covered in the IRS publication General Instructions for Certain Information Returns, p. 12.

  8. 7. How will you deliver the filing information to the IRS? • If you file 250 or more 1099s under one EIN, you must file electronically. The IRS encourages all filers to e-file, though, and you can e-file as few as one 1099. One benefit to e-filing is that you have a later IRS filing deadline. While paper filers must file by February 28, e-filers can delay the e-file until March 31. You can even schedule the e-file date on Tax1099.com when you create the forms for your vendors.

  9. 8. Who needs access to the forms once they’ve been filed? • For small businesses, you may be the only person who needs to see the 1099 information. Larger companies and accounting firms, though, may need to have several users with access to the information. It can be handy to have a tool that allows you to create multiple users with different access rights in that situation.

  10. Contact Us Tax1099.com Email: support@tax1099.com Phone: 1-877-811-ETAX/3829 320 N. Rollston Ave, Suite 103B Fayetteville, AR 72701

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