1099’s are due by January 31. Starting 1/31/17 they need to be filed with both the recipient and the IRS by that date. Otherwise, you’ll face penalties (see below). If you have paid someone over $600 for services or for rent, then you most likely need to send them a 1099. However, if you paid a corporation or paid them via credit or debit card, then you are not required to send a 1099. Some corporations are still required to receive a 1099, such as attorneys. We advise all clients to have people who are providing services for them to fill out a W-9. This helps us determine if they need to receive a 1099 because they have to tell us what type of entity they are by checking a box. The following payments would require issuance of a 1099:
-Rent over $600 – reported on 1099-Misc.
-Royalties over $10 – reported on 1099-Misc.
-Other Income over $600 – reported on 1099-Misc.
-Nonemployee Compensation over $600 – reported on 1099-Misc.
-Gross Proceeds Paid to an Attorney over $600 (this is reported in Box 14 of 1099-Misc – it typically applies if you paid out a settlement, any other legal services would be reported in Box 7 on 1099-Misc).
-Interest on Business Debt to Someone over $10 (excluding interest on an obligation issued by an individual) – reported on 1099-Int.
-Dividends or other distributions to a company shareholder over $10 (most applicable to C Corporations) – reported on 1099-Div.
It is worth nothing that the following questions will be on your tax return:
1.) Did you make any payments in 20XX that would require you to file Form(s) 1099?
2.) If “Yes,” did you or will you file required Forms 1099?
As paid preparers, we have to make sure that we answer these questions correctly, which means verifying with you, the taxpayer, whether or not you had any required 1099s to be filed. The penalty for not filing a 1099 ranges from $30 per 1099 to $100 per 1099, depending on when the forms are filed.
Business property tax listings are also due by January 31, unless you request an extension with your county tax department. The forms will be mailed out the beginning of January. The tax department uses this form to calculate your personal property tax (i.e. – tax on equipment, furniture, leasehold improvements, etc.). Your responsibility is to fill out the form for any new purchases made during the year. Since it directly impacts the calculation of your personal property tax, you can see why it is very important to make sure everything is accurate.
Please let us know if you would like our firm to assist you with preparing either of these items. It is not too early to start the process so that we are fully prepared in January for the deadline.