how to file form 1099 misc

Hiring a contractor can be a stressful job, but unfortunately your job is not done once you write that final check. At the end of the year you may also need to fill out . If you worked as a freelancer or contractor last year, you probably received a 1099-MISC tax form. Learn how the 1099-Misc is different from .

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how to file form 1099 misc

How to file form 1099 misc

The Internal Revenue Service wants to share some tips on filing Forms 1099-MISC, Miscellaneous Income, to avoid costly penalties.

First, go to to locate the Form 1099-MISC product page, simply enter Form 1099 M-I-S-C into the search box, and select, ┬ŁAbout Form 1099-MISC, Miscellaneous Income┬Ł Off the top, you will see the basic filing requirements for reporting payments on Form 1099-MISC.

as well as links to important resources such as a copy of the current revision of Form 1099-MISC itself.

along with the "Instructions for Form 1099-MISC," Which contain details on Reportable Payments and exceptions, Payments made to corporations, and box by box instructions with examples.

The General Instructions for Certain Information Returns link leads you to these instructions and contains details about: Who must file these forms, When and where to file Form 1099-MISC, Electronic reporting requirements, How to make and file corrections, Providing statements to payees, and What penalties may be applied.

Now, most businesses, including for profit, non-profit, and governmental entities, will furnish and file Forms 1099-Miscellaneous for certain types of payments made in a calendar year.

These payments include payments of at least $10 in royalties, certain substitute payments by a broker and payments of at least $600 for rents, services by a non-employee, gross proceeds paid to an attorney, and certain other payments that are fixed or determinable income to the recipient.

Review the instructions to identify reportable payments and exceptions.

Do not furnish a Form 1099-MISC to banks, public utilities or tax exempt organizations.

Also, most corporations will not be issued a Form 1099-MISC, unless they have been paid $600 or more in a calendar year for certain services, including medical or legal services and including gross proceeds paid to attorneys.

See the instructions for more details.

Reportable payments made to providers of medical or health care services are reported in Box 6 of the form even if the payments are made to a corporation.

You are not required to report payments to certain hospitals or extended care facilities.

Review the instructions for payments to report in Box 6.

Also, a Form 1099-MISC is not required to report payments to pharmacies for prescription drugs.

Report attorney or legal firm's reportable payments in either Box 7 for legal fees paid or Box 14 if you have paid a legal settlement or other gross proceeds payments to attorneys.

You must also issue a Form 1099-MISC for payments of $600 or more in rents (such as for real estate or machinery) and personal services of all kinds when provided by anyone who is not your employee.

It is common for payments made to non-employee service providers to include parts and materials.

Whenever the parts or materials are incidental to the service provided, such as when parts are used to repair an automobile, report the total amount of the invoice in Box 7.

Royalties have an even stricter threshold.

If you have paid certain types of royalties - whether for tangible items such as oil or gas wells or for intangible items such as music rights or product patents, you report payments of $10 or more in Box 2 of Form 1099-MISC.

See the instructions for more details.

Failing to furnish a correct Form 1099-MISC to the payee and failing to file it with the IRS incur separate penalties for each form, under sections 6721 and 6722 of the Code.

Recent amendments have raised the base penalty rates and maximum penalty amounts, as well as made them subject to annual inflationary increases.

These increased penalties are applicable to penalties for failure to file correct information returns and to provide correct payee statements required to be filed after December 31, 2015.

In addition to a penalty for failure to file a Form 1099-MISC with the IRS, failure to furnish the form to the payee, by the due date, could subject the filer to another penalty of up to $260 for each Form 1099-MISC, depending on the date the forms are actually furnished .

The due date to furnish the Form 1099-MISC to the payee is generally January 31 of the following year.

Beginning with the 2016 tax year, Form 1099-MISC will be due to the IRS by January 31 of the following year when you're reporting non-employee compensation payments in box 7.

Otherwise, file by February 28 if filing by paper, March 31 if filing electronically.

If you are filing 250 or more forms, you must file electronically.

Failure to file these forms with the IRS timely also incurs a penalty.

For 2016, the penalty amount is up to $260 for each Form 1099-MISC, depending on the date the forms are correctly filed.

The sooner the late forms are furnished to the payee and filed with the IRS, the lower the penalties, so it's worthwhile to fix this situation quickly.

Therefore, failure to meet the compliance requirements, with no reasonable cause, may be subject to $520 in penalties for each form not furnished to a payee or filed with the IRS.

For example, 20 forms not provided to payees, and not filed with the IRS by August 1st of the following year, with no reasonable cause, could result in $10,400 in penalties.