The 1099-misc form is used for reporting specific payment types made in business or trade. If you are self-employed or in business, you might have to submit form 1099-MISC to both the business or the person you are making payments to and to the IRS. You can even submit form 1099 online. If you are a businessman or an individual making payments to others then it is necessary for you to remain aware of 1099-MISC instructions. IRS form 1099-MISC instructions will help you in completing and submitting Form 1099 in the best way possible without making any mistakes.
When is Form 1099-MISC Needed?
Trading companies and business will have to fill out a 1099-MISC form for independent contractors, individuals and subcontractors and others in circumstances where:
Payment of $600 or more is made for:
· Crop insurance proceedings
· Cash payments to fishermen
· Proceed payments made to lawyers
· Health and medical care payments
· Awards and prizes
· Services like materials and parts
· Rents and various other payments type not covered under any other document that reports all sorts of financial information.
Payment of $10 or more is made for:
· · Royalties, and
· · Broker payments in lieu of tax-exempt interest or dividends
Such payments need to be reported if the individuals receiving these payments are not corporations. In other words, these payments should be reported if the recipients are partnerships, individuals or limited liability companies treated as sole proprietorships or partnerships. Other different payment types made to corporations need to be reported by making use of Form 1099-MISC.
Form 1099-MISC Instructions- Steps for Preparing Form 1099-MISC
It is necessary for you to request that your contractors, vendors and other recipients of payments submit Form W-9 to you. Form W-9 is important because it will give you the legal address, name and the taxpayer identification number of the vendor. This information is of great importance because it is needed when preparing 1099-MISC form. Further, in the form 1099-MISC instructions category, it is necessary for you to keep a track of all the payments that you make in a bookkeeping system. It is important that you know whether the payments fall under the categories that have been listed above. It is also necessary that you know whether the payments that you make to recipients reach the $600 or the $10 threshold. Finally, you must also have an idea about the specific amount that you pay to a recipient during a calendar year.
1099-MISC Deadline and Penalties for Late Filing
You must provide the payment recipient with a copy of Form 1099-MISC by February 1, 2017. The payments should be reported for the 2016 tax year. The IRS should receive Form 1099-MISC by February 28, 2017. You also have the option of filing Form 1099-MISC electronically by March 31, 2017. A 30-day extension for filing 1099 forms with the IRS can be requested by businesses. They can request the extension and file their 1099s using 8809 Form. It is to be noted that an extension should not be treated as the permission to use additional time for providing a recipient with form 1099.
If you are unable to follow the form 1099-MISC instructions properly, you are likely to make mistakes and even fall prey to the penalties of late filing form 1099-MISC. The penalties are as follows:
- $60 penalty for late payment of form 1099 by 30 days and prior to 1st August.
- $30 penalty for late payment of form 1099 by 30 days
- $100 penalty for filing 1099 on or after 1st August.
- $250 penalty for international filing failure.