1099 Tax filing and compliance can be a lot to manage whether you are new to 1099 information filings or a seasoned vet. While no one individual step is overly complicated in and of itself, keeping track of all the moving pieces, in the right order, at the right time can be a challenge.
For that reason, we have created this comprehensive checklist to help keep you on track with your end of year tax filings.
It sounds obvious, but the very first step in filing your 1099s at the end of each tax season is to determine if you are required to file 1099s and, if so, which type. Chances are if you are paying another entity non-employee income with any regularity - you are required to submit a 1099 tax filing.
For a more detailed look at form types (including less common forms), please see our Guide to 1099s and Fast Filing. For the sake of this checklist, let’s focus on some of the most common 1099 forms: 1099-INT, 1099-NEC and 1099-K. The trigger for each can be found in the flow diagram below:
Note - Each form has a different approach to the amount that has to be paid to a single entity before requiring a 1099 be filed. A 1099-K must be filed at $20,000 in aggregated payment total and 200 transactions, a 1099-INT must be filed once $10 in aggregated interest is paid, and a 1099-NEC once aggregate payments total $600.
Now that you’ve confirmed applicability and the relevant form type(s), it’s time to aggregate your W-9 inputs. If you have been collecting W-9s as you onboarded new contractors, sellers or users (“payees”) for your platform/service - simply gather all W-9 inputs into a central location and do a quick review for completeness of information provided. If you have not been collecting W-9 forms, you will need to reach out to all applicable parties and collect W-9 forms.
While TIN verifications are optional, it is a best practice to submit name and tax ID number combinations for each payee. This helps not only to flag mismatches (before incurring penalties), but also to prevent fraud, reduce reporting burden, and avoid delays to your reporting deadlines. TIN verification may be handled directly with the IRS or automated with a 1099 compliance partner.
Using accounting software, the IRS copy posted online or an automated service provider, leverage W-9 inputs and payment information from the current tax year to generate a 1099 tax form.
Once forms have been generated, make sure to send them to your payees as soon as possible. Doing so early allows opportunity for the payee to correct any mistakes prior to submitting the form to the IRS.
DEADLINE - Payees must receive 1099 tax filing forms by January 31 of the next calendar year.
Not all states require separate filings, but some do. When filing your 1099 tax forms, first file with the IRS and then double check for state filing requirements. If your state requires a separate filing file your tax forms(s) there as well. For more information on state requirements, see our Guide to State Filing 1099s.
Deadlines to File with IRS:
Note - state filing deadlines may differ from IRS deadlines and also need to be checked as they may differ and in some cases predate the IRS deadline.
Despite best efforts, errors still pop up from time to time. In the event that you submit inaccurate 1099 tax form(s), the IRS will let you know by sending a CP2100 or CP2100A Notice. Specifically, those with fewer than 50 erroneous filings will receive a CP2100A and those with 50+ erroneous filings will receive a CP2100 Notice.
A CP2100 notice of either variety indicates that one or more of your 1099 tax forms has missing data or data that does not match IRS records and requires correction. To remedy this situation without further penalty, you must correct the information with the IRS by resubmitting a replacement 1099 tax form with accurate data, in some cases this may require issuing a B-Notice to your payee(s). For more information, you can reference IRS guidance on CP2100 and CP2100A.
We hope this checklist is helpful in keeping you organized and on-task this tax season. If you have any questions, we’re always here to help - visit our website at withabound.com or reach out to us at firstname.lastname@example.org.
We believe that tax season can and should be simpler, so reach out if you’d like to save costs, confusion or your sanity this tax season - we can automate your troubles away and give you an intuitive central source truth to stay updated and in control (on even the busiest days).