As if there wasn’t enough to worry about at the end of the year for any business in terms of required filings with the federal government, there is one that regularly gets overlooked and it shouldn’t anymore. With a new deadline and stiff penalty amounts for failing to prepare and timely file required 1099s, that mistake could prove very costly very quickly. No business, no matter how small or large, can afford to overlook preparing and filing their required 1099s any longer. However, with a little effort before the end of the year, most companies can easily meet this requirement with little trouble.
Businesses are required to prepare and file 1099s if they pay $600 or more to any person or company for rent or services. The deadline to file all required Forms 1099-MISC is January 31 following the year being reported. So, the next deadline is January 31, 2019 for the tax year ended December 31, 2018.
The penalties for failing to timely file correct 1099s depend upon when the you file them. If you file all correct 1099s within 30 days after the filing deadline, the penalty is $50 per late 1099. The penalty for late filing correct 1099s after 30 days following the deadline, but by August 1, is $100 per late 1099. If you file correct 1099s after August 1, the penalty is $270 per late 1099. If the IRS determines you willfully disregarded the 1099 filing requirement, your failure to file penalty will be the greater of $540 per 1099 or 10% of the aggregate dollar amount of all 1099s that were required to be filed.
For example, let’s say you filed a total of eight 1099s on April 3, 2019 for 2018. The penalty for not having those 1099s filed by January 31 would be $100 per late 1099, or $800. You can see the cost of overlooking your 1099 filing requirements escalates quickly.
Although preparing and filing 1099s during January may just add to the ever-growing list of tasks to accomplish during that month, actually preparing them and getting them filed is a pretty simple matter if you plan a little bit ahead of time. Give us a call at CPA Consulting Group, LLP and we will quickly answer any questions you might have about 1099s, help you determine how many 1099s you might be required to file, and also help you develop a strategy to timely file all required 1099s.
Remember, if you are unsure as to whether or not you are required to file 1099s in 2019, it’s always better to give us a call and discuss your situation than to find out that you were required to file 1099s by receiving a letter from the IRS informing you of how much you owe.