Preparing for the 1099 Filing Season: Are You Ready? 

1099 filing season is approaching, and now is the time to review your vendor information to ensure everything is in order come January. Let’s break down what you need to know ahead of time.

First, you want to familiarize yourself with the standard 1099 forms that most companies must file.

  • 1099 NEC (Non-employee Compensation) reports payments of at least $600 or more in the calendar year to non-employees for services rendered.
  • 1099 MISC (Miscellaneous) reports miscellaneous payments such as rent, prizes and awards, other income, medical and health payments, legal settlements, crop insurance proceeds, and fish boating process of $600 or more.
  • 1099 MISC (Miscellaneous) is also used to report royalties of at least $10 and any amount of Section 409A deferrals and nonqualified deferred compensation plans (NQDCs)
  • 1099 INT (Interest) is used to report interest paid of at least $10.
  • 1099 DIV (Dividend) reports dividends paid of at least $10.

Now that you know the different 1099 forms, you can start reviewing your records to identify which vendors require a 1099. It is good practice to always have form W9, Request for Taxpayer Identification Number and Certification, on file for all vendors before issuing payments. Form W9 will contain the vendor’s Taxpayer Identification Number (TIN), mailing address, and their classification for tax purposes. The TIN may be a Social Security Number (SSN) or Employer Identification Number (EIN).

New to 2023

  • Starting the tax year 2023, if you have ten or more information returns to file in aggregate, you must file them electronically.
  • Corrections to forms 1099 must be done in the same form they were initially filed. If your third-party vendor filed form 1099 electronically, you can no longer send a paper correction; the correction must be done electronically.

The IRS has developed IRIS (Information Reporting Intake System), an online portal that allows taxpayers to e-file their information returns. You will need an EIN and a Transmitter Control Code (TCC) to use IRIS. Now is the time to apply for a TCC, as it may take up to 45 days to process the application. If you must file electronically but fail to do so and do not have an approved waiver, you may be penalized for failure to file electronically. The maximum penalty for most of the information returns is $310 per return. 

2023 1099-MISC, 1099-INT, 1099-DIV Deadlines

  • Recipient copies – January 31, 2024
  • Paper filing – February 28, 2024
  • E-filing – April 1, 2024

Forms 1098, 1099-A, 1099-C, 1099-DIV, 1099-G, 1099-INT, 1099-K, 1099-MISC, 1099-NEC, and 1099-S have been converted to a continuous use form – meaning the IRS does not anticipate annual changes in the future. There are no substantive changes to the form or instructions for 2023.

2023 1099-NEC Deadlines

  • Recipient copies – January 31, 2024
  • Paper filing – January 31, 2024
  • E-filing – January 31, 2024

An extension of time to furnish statements to recipients may be requested by fax. Your request must be received no later than the date the statements are due to the recipients. If your request for an extension is approved, generally, you will be granted a maximum of 30 extra days to furnish the recipient’s statements. Failure to file a correct information return results in a penalty of at least $630 per information return with no maximum penalty.

Now is the time to review vendor files to ensure everything is in order. Requesting vendor information is time-consuming, and you want to allow yourself ample time to reach out and follow up with vendors. January 31st will be here before you know it and after having time off for the holidays the last thing you want to do is add on to all the other year-end information you need to provide. Do yourself a favor and “don’t put off till tomorrow what you can do today”.

Contact Us

Reach out to Withum’s Outsourced Accounting Systems and Services Team if you have any questions or need assistance with 1099s.