Due by January 31, 2013 are Forms 1099 for all independent contractors and companies to whom you paid $600 or more for services in 2012. Because there are always questions about issuing Form 1099, I wanted to provide you information that may be helpful.
- Corporations do not require Form 1099. However, if you are unsure of the corporate status of a company, it is best to go ahead and send a 1099.
- Attorneys need a Form 1099-MISC from you regardless of entity status. So, ALL attorneys to whom you paid $600 or more in 2012 require a Form 1099-MISC.
- Royalty payments in excess of $10 require a Form 1099-MISC.
- Remember to include rental payments for office space, machine rentals and pasture rentals in your list of 1099s. Storage units do not count as rental property.
- Cash or prizes valued at $600 or more and awarded to individuals (not employees) require a Form 1099 if there was no wager involved. Include the amount of federal withholding tax, if applicable. If a wager was involved, issue Form W-2G instead.
- Make sure that you have a Form W-9 on file prior to issuing the Form 1099. This form is your record of all the information you need to complete a 1099 – legal name, address and taxpayer identification number. If you suspect a change of address since receiving the W-9, then correct the information for your records.
- There are no extensions available for sending Form 1099 to the required parties. In fact, you’ll have to pay a $30 penalty within 30 days late, $60 for after 30 days and prior to August 1, $100 penalty for filing on or after August 1, and $250 for intentionally not filing a Form 1099.
- You need to file a copy of the Form 1099-MISC to the IRS by February 28, and you may request a 30-day extension for the IRS copies by using Form 8809. If filing electronically, the deadline is March 31.
- Remember to file Form 1096, which is a summary of the 1099s that you issued.
The above reminders can be complex; referring to the IRS instructions will provide additional clarity. Happy New Year!