Common Misconceptions About 1099s

When it comes to filing 1099s, there are a lot of key things to keep in mind. You need to have all of your information in order to ensure that you don’t miss a single one. For some companies, this means filing a handful of 1099s. For other businesses, you could be looking at hundreds upon hundreds of 1099s. Whatever the case, it is important that you have a clear understanding of what is expected of you by the IRS. Failing to file things correctly could lead to fines and penalties for your company.

At OnlineFileTaxes.com, we make the process of filing 1099s simple. We work hard to ensure that customers who utilize our online platform have a clear and realistic understanding of what is expected of them. Before you get to work putting together the list of 1099s you need to file, check out the following myths about 1099s and be sure you don’t fall for any of them during the upcoming tax season.

#1: I need to file 1099s for corporations

When it comes to filing a 1099, it is reserved for specific cases. Generally speaking, a 1099 is used to report income that was paid to an independent contractor over the amount of $600 in a given tax year. There are other scenarios in which a 1099 must be filed, but the bulk of 1099s revolve around the use of contracted labor. The goal of a 1099 is to report to the IRS money that was made by a contractor who is not your full-time employee. This person will then use the 1099 you send them to file their own taxes. They will be required to pay taxes on this income as an independent contractor. A good example of this would be if you hired a freelance writer for a project this past year. The money you paid them if it totals over $600, will need to be reported to the IRS.

However, if you paid money out to a corporation that you hired for a job, things are different. Corporations do not require 1099s unless you hired the help of an attorney. When in doubt about whether or not the labor you hired was from an independent contractor or a corporation, simply ask. It is better to be certain than to guess.

#2: If I don’t issue a 1099, it won’t really matter

Another misconception surrounding 1099s is the idea that it really won’t matter if you skip these forms. It is never a good idea to neglect to report information to the IRS. If you think there is a possibility that you should be filing 1099s, then odds are good you should. Err on the side of caution rather than skipping this task.

You might enjoy filing 1099s, but if the IRS finds out you were hiring contractors and not declaring this income that they earned, you could wind up paying out a lot in fines and fees.

#3: I only need to send the form to the recipient

Another myth around 1099s is the idea that once you send a 1099 to the appropriate recipient, you are done. While this is a vital step and the deadline for doing so falls earlier than the date for filing taxes with the IRS, this isn’t the only thing you must do. You also need to file the 1099 with the IRS.

The reason why you have to both send a 1099 to the appropriate recipient, as well as file with the IRS, is because they want to have a detailed report of what contractors should be paying them taxes. They use this information to ensure that the person you sent the 1099 to is actually following through with filing their own taxes.

#4: If I miss the deadlines, it doesn’t hurt

There are a slew of deadlines you need to meet when it comes to filing your business’ taxes. 1099s all come with their own set of deadlines as well. There are deadlines for the date by which you need to have mailed the 1099 out to the appropriate recipient and there are also deadlines for filing the 1099s with the IRS. It is a common misconception that missing these deadlines isn’t a big deal.

Many businesses falsely assume that they won’t suffer a penalty for missing the deadline of mailing out their 1099s to recipients. The reality is that the IRS will penalize you with fines if you miss either deadline. Be sure you start early on filing your 1099s to prevent a costly mistake.

#5: I have to file 1099s manually

Once upon a time, the only way to file 1099s was to purchase lengthy forms, fill them out by hand, mail them by hand, and file with the IRS via snail mail as well. Today, things are different. Gone are the days of tedious handwritten forms.

You can now file 1099s through an online platform, saving time and money. Not only can you handle filling the forms out online, but you can then automatically send the recipient their 1099 via email and mail. From here, you can then submit your 1099s to the IRS through e-filing.

Save time and sign up for OnlineFileTaxes.com today to e-file your 1099s with ease.

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