If you are in business, you probably hate sending out 1099 Forms. In fact, you are probably thinking - no one likes 1099s except the IRS. That may possibly be true but so is the fact that if not reported timely and accurately it can completely blow your business budget.
The IRS matches nearly all 1099s and W-2s (those are the wage report forms from your employer) against your 1040.
The penalties for not doing so can vary from $30 to $100 per form ($1.5 million for the year), depending on how long past the deadline the company issues the form. If a business intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $250 per statement, with no maximum.
The 1099 penalty also applies if you file on paper when you were required to file electronically on your 1099 paper forms are not machine readable. Additionally, penalties may apply if you fail to report or include a correct TIN (tax identification number). The amount of the 1099 deadline is based on when you file the correct information return.
Here are 6 things you should know about 1099s:
There’s no perfect solution, but one thing is clear. If you receive a Form 1099, you can’t just ignore it, because the IRS won’t. Developing a procedure for your company can not only save your business time in ensuring accurate employee data is available but save you money from penalties and interest.
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