New 1099 Checkboxes

Do you remember all the cheering from tax preparers and small business owners a while back? The expanded 1099MISC requirements were repealed and we were back to only have to issue to individuals we paid over $600 for services in the year. They’re still in effect but now the IRS had modified the forms for the Schedule C, E and F to include 2 check boxes. The first one wants to know if you were required to file 1099s for anyone and the second one wants to know if you did or will file them all. These are no win questions.

If you should have filed the forms and mark that you weren’t required to file them, you might get a letter asking why the forms weren’t filed and please file them now. If you said you would be filing them and didn’t file them, you could get a letter asking for the missing 1099s. You best bet is to file the returns on time and prevent the letters and save yourself some money.

Any 1099 you issue should be sent to the recipient by the end of January. However, you have until February 28^th the send the IRS their copy (paper or electronically) If you don’t you are subject to penalties. Up to 30 days late, each 1099 could cost you $30. The cost goes up to $60 between 30 days and the 1^st of August. After August 1^st, the late fee is $100. For each 1099 that was late, you could pay $30, $60 or $100. That can add up. And if you don’t plan on issuing a 1099, you can’t deduct the expense. Is it finacially worth not fileing the 1099s? I don't think so.

While 1099MISC is the 1099 I prepare most for clients, these rules apply to any 1099 form. So you are warned, get your info together and file your 1099s on time.

Comments

[Ron Aran]

A lot of confusion/mis-information on the web regarding the repeal of certain parts of the expanded 1099MISC legislation.
Something I would like to know for certain: Has the original stipulation that a 1099MISC had to be filed for the purchase of goods (not services) for more than $600.00 been repealed for 2011 tax year? e.g. Say I sell your business a box of hammers for $1000.00 and you pay me by check, are you obligated to file a 1099MISC for the transaction? I believe the answer is no but I'd like to know for sure ;)