It’s almost time for businesses to file their 1099s (before the yearly Federal deadline). The 1099 form 2020 consists of a series of documents that the Internal Revenue Service refers to as “information returns.” There are a number of different 1099 forms that report the various types of income an individual may receive throughout the year, and the IRS requires businesses to report these payments to others.
Ideally, you should already be collecting W9 forms throughout the year for your business records. W9 forms are meant to document any non-employee whom you paid more than $600 throughout the year, by payments other than credit card. Those are the payees for whom you’ll be required to file the 1099 form.
However, the IRS rules are never that simple, are they?
1099 Form 2020 Help
Naturally, there are a few additional circumstances to consider, and we’re a team of professionals that are more than happy to make a bit more sense of things. Not only can we provide clarity into this complicated process, but Acuity can handle everything necessary to electronically file your company’s 2020 1099s. In addition, if you’re unsure of your filing requirements, our team can easily confirm what you’ll need to file before the deadlines.
- If you are a current customer who utilized our 1099 services last year — we’ve already got you on this year’s list. All you need to do now is stay tuned for further details, which you can expect to receive early on Opening Day of Acuity’s 1099 service season – that’ll be Monday, November 23rd!
- If you are a current customer who did not utilize our 1099 services last year — we’ve got you covered! Just schedule a time to chat with us about how everything works. Once you’ve signed up, and if needed, we’ll complete a basic analysis to determine the health of your books and check for any important details that may be missing from your W9 records. When finished, you’ll receive a quote that clearly explains any required or recommended services before we move forward with further work. All you need to do now is stay tuned for further details, which you can expect to receive early on Opening Day of Acuity’s 1099 service season – that’ll be Monday, November 23rd!
- If you are not currently an Acuity customer but are interested in 1099s help or other tax services — reach out to our team today to discuss!
As seasoned financial experts, we often receive inquiries regarding who should and should not receive a 1099. Here are some of the answers to your most frequently asked questions.
Q: When is the deadline for filing 1099s?
A: The deadline for 1099s this season will be Feb 1, 2021. Furthermore, 1099-MISC forms with amounts reported in boxes 8 or 10 will be due on or by Feb 16, 2021. The most common required filings for business, however, are those due by the Feb 1st deadline, so taking care of your business’ 1099s as early as possible is for the best.
Q: What information is needed to file a 1099?
A: As mentioned briefly above, it’s important (and well-advised) that you have a completed W9 form on file for every non-employee paid during the year. An additional best practice for companies is to ensure that you always collect a W9 form prior to issuing payment.
Q: Do foreign contractors receive a 1099?
A: Foreign contractors do not need a 1099 as long as –
1) they are not a US citizen, and
2) the work was performed wholly outside the US.
However, to verify these two facts, you must have the foreign contractor fill out form W-8BEN to keep for their records. If a foreign contractor is subject to US income tax, then form 1042 must be completed and filed with the IRS.
Q: Is a 1099 required for personal expenses?
A: Do not file a 1099 for personal expenses, even if they were paid from a company account.
Q: What about rent payments or reimbursements for mileage?
A: Rent payments should get a 1099 but only for the rent portion of the payment. Reimbursements for mileage or expenses should not be reported on a 1099.
Q: Are 1099s based on the date of payment or date of check clearance?
A: 1099s are based on the dates the payment was made regardless of when the check cleared the bank.
Q: Can you request an extension?
A: A 30-day extension of time to file a 1099 (reporting NEC only) can be requested using IRS form 8809. However, businesses must meet no less than 1 out of 5 listed criteria, as specified per box 7 of form 8809.
Q: Are there any changes to consider from last year?
A: Form 1099-NEC will be making a comeback. This form was last used in 1982! Form 1099 NEC will be used to report nonemployee compensation which was previously reported on 1099 MISC. Examples of nonemployee compensation are money paid to freelancers, independent contractors, gig workers and others that aren’t employees.
Q: How can Acuity help with 1099s?
A: Acuity offers 1099 services and W9 collection services that were made for businesses like yours. We advise that you reach out to your primary Acuity resource for clarification and further assistance! You can also get in touch with us through chat via our website, https://www.acuity.co.
Q: What happens if I don’t file the required 1099s?
A: Remember, filing a 1099 is the law. If you file late, you could face penalties ranging from $30 to $100 per form (with a maximum penalty fee of $500,000 per year), depending on how late your filings are. Intentionally disregarding the requirement to provide a correct 1099 form leaves you subject to a minimum penalty of $250 per 1099 (and that has no maximum).
Additional Tax Resources
Free Quarterly Tax Estimates Calculator
Tax estimates are dreadful, but they can make or break your tax filing (and your sanity) depending on how they’re handled! Most people feel like they don’t have a tax plan, and no one we talk to seemed to have a tool that helped. So, we created one! Here’s your go-to guide for quarterly tax estimates including a free calculator AND important tax deadlines to keep in mind.
The Best Time to Get Tax Advice
Looking for more strategic tax advice from your tax advisor? Generally it’s a good idea to prioritize this during their “slow” periods (May 1 – July 31 and Nov 1 – Dec 15). Here’s how you can use this time wisely and get prepared.
Tax Services for Small Businesses & Startups
If you still have questions, let us know! We’re well-versed in filing 1099s, utilizing tax credits, and assisting you with all of your tax preparation needs. Check out our tax services page, or talk to a team member today!