Are You Required to File Form(s) 1099?
Congress and the Internal Revenue Service are on a mission to cut down on unreported income. A grilling question on the top of tax forms Schedules C and E is, “Did you make any payments in 2011 that would require you to file Form(s) 1099?”
Form 1099s are information returns. They make the IRS aware that someone else has received income from you. Generally speaking, if you paid any one person or entity $600 for services last year, tax law requires you to send them and the IRS a 1099-MISC. That MISC is for “miscellaneous” income.
This year, for the first time, the IRS is reminding all taxpayers of their legal obligation directly on tax forms. They’re also getting taxpayers on record as to whether they complied.
Taxpayers who don’t handle these questions the right way are opening themselves up to penalties. That could be up to $250 for each 1099 the IRS didn’t get and $250 for each 1099 a contractor didn’t get, with no cap on the amount. The IRS can also disallow the expenses claimed as deductions if they’re not documented as they should be on 1099s.
Due dates
The deadline to comply with these requirements is coming up. The recipients of the funds are to receive 1099s by February 15, 2012. The IRS is to receive copy A by February 28, 2012 unless filed electronically. Electronically filed 1099s are due to the IRS by April 2, 2012.
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