Tag Archives: Form 1099

1099 Penalties – What You Need To Know And How To Avoid Them

1099 forms are becoming the method of payment for a growing number of people acting as independent contractors and small businesses. Any company or individual with whom you do over $600 must be issued a 1099. This includes payments for rent or any service a contractor, consultant or expert provides.

Professional fees are included in this requirement. These would include doctors, lawyers or other professionals. Payments to corporations are excluded only if they are not involved in supplying you with medical and health care, legal services or fishing activities.

These forms must legally be filed whether or not you are going to declare the money as expenses, and the forms must be filed if you are a business or a nonprofit organization.

Typically, form 1099s must be filed in the last week of February, and if filing electronically about 30 days later. In 2013, the current year, the exact dates are February 28 if filing by paper and April 1 2013 if filing electronically.

If you are filing over 250 1099s, the federal government requires that they be filed electronically. Extensions can be easily obtained using form 8809. You can file it in paper form or over the internet, but if you have more than 10 1099s that you are extending you must file this form electronically.

The extensions must be posted before the regular due date, and extend the period by 30 days. There is recourse if you have lost the information through no fault of your own, such as fire or flood, but you will have to be able to prove how you lost the information.

The penalties can quickly become a major liability to businesses, and can occur for one of two reasons.

The first occurs when you are filing the forms after the due date, or after the extended due date. If it is less than 30 days past due, the penalty is $30/form that it is late, with a maximum penalty of $250,000 ($75,000 for small business).

The rate climbs to $60/form if it is more than 30 days late but is filed before August 1st.

The last and highest rate includes anything filed after the 1st of August, and assigns a $100 penalty per form. The cap on total penalties at the highest end is $1.5 million, and $500,000 for small businesses.

1099 penalties can quickly accumulate. If you enter incorrect information on the 1099 forms, the highest penalty level will be used of $100/form, but if you intentionally disregard the filing requirements or intentionally enter false information the penalties start at $250/1099 form, with no maximum limit.

Online file taxes can easily guide you through the 1099 process, and make sure that you are using the correct 1099 forms. In almost all cases that will be the 1099-MISC, but there are some specialty applications that call for other 1099 forms, such as the 1099-INT, the 1099-B and others.

Keep good records, and there is no need to worry about your 1099s – and Online File Taxes is here to help when you need it!


So, we have covered the aspects of using 1099 forms for business. The most widely used of the 1099 form is the 1099-MISC, and this is what people usually mean when they say ‘1099’. If you are doing nearly any type of work or service for any type of business, whether it is a single person operation or a corporation with thousands of employees, the 1099-MISC is the form that they will use to keep track of your earnings on their end. They can then deduct those as expenses.

If you have gotten a 1099-MISC from a business that you did any type of work or service for (and were not on their actual payroll), then the government has also received notice, and they will cross check 1099 forms which companies file against the individuals they show payment to.

Any time you do more than $600 in the course of the calendar year they must issue a 1099 form, and in all but a few specific cases it will be a 1099-MISC. Even if you don’t receive a 1099-MISC, if you have make $400 setting up a business’ computer system you do have to report that income. The reporting just isn’t automatic, as it is when the $600 limit is reached as with a 1099.

It is a bit of extra work for the tax payer, but the forms are fairly easy, especially if you are using some sort of software package to help with your taxes. If you are using a professional service, either online or one in your area they will take care of the forms for you. But, never forget you are on the hook if your taxpayer messes up (despite what they say).

At the least you should know what forms have to be filed, even if you are not going to fill them out yourself.

With 1099-MISC income, you will need to file a Schedule C or Schedule C-EZ (if you are filing 1040EZ). It is also on this form that you will list your deductible business expenses. It is extremely important that you document all business expenses with receipts and notations in some sort of book (or computerized records).

These deductions are separate from the deduction you get on your personal taxes, and they will come off the top of the gross income. Remember, though, if you do not have a provable paper trail of payments and receipts you will not be able to use those expenses to adjust your income properly into profit and operating expenses that will not count towards income,

The other form you will file is a Schedule SE. It is possible, especially if you started a consulting firm late in 2012 that your expenses are more than the money you have earned thus far. The Schedule SE simply shows the amount of profit you made from the business or venture after expenses, and shows how much tax you will owe on that money. If you do not show a net profit you will still use the Schedule SE but you will not owe any business taxes. You only pay taxes on net profits (that is, what is left over after all expenses have been paid).

All of these forms are fairly easy to fill out on your own if you are good with a calculator. Even if you are using a computer program or a tax professional, though, it is good to know how they are getting the number at the end of the last page. Now you should have a clear understanding of how the 1099-MISC form works, and what to do with it!


Using the 1099 form is an increasingly regular practice among businesses of every type. Since the depression in 2008, 1099 use has increased across the country, with some markets seeing even more growth than usual. Over the past decade, people who primarily get paid by 1099s increased by 51% in Texas.

Much of that growth has occurred since the depression as companies don’t want to expand their payroll, but they need workers in critical areas, especially hi-tech and other areas of expertise.

As a result, there are more people using 1099 forms now that ever have before and more businesses that are paying those people. Many of these are small businesses, and are unfamiliar with the 1099 when it comes to tax filing issues. OnlineFileTaxes will be tackling issues dealing with the 1099 and the best way to make sure you follow the rules in this post and several following it.

The following is general information – for your specific taxes and tax situation, see a qualified tax preparer or accountant.

In this post we are going to be dealing with 1099 forms and when you need to file them. Once you have all your 1099 forms compiled, you will need to file them by February 28, 2013 if you are filing by paper. If filing electronically, they will need to be filed by April 1, 2013.

When sending copies to the people you have paid, January 31 is usually the date which you have to send their copies. This gives those people time to take care of their taxes.

Just like normal taxes, as long as it is addressed and mailed before the end of business on the last day it is considered filed on time. These dates do change from year to year, but fall regularly for paper filing in the last week of February and electronically typically a month after that date.

You will also need to send the recipients their 1099 form; this may be done by private company as well as the US Postal Service. Right now authorized delivery companies are DHL Express, Federal Express and UPS, but to fit within the guidelines you generally have to use next day or 2nd day air.

Depending on how large your company is and how many times they have used 1099’s you may have to file electronically. If over 250 1099 forms re to be filed by any company, they must file those forms electronically.

Filing for an extension on the 1099 deadline is quite easy and there is no explanation needed, just file the extension by the due date when the 1099 was going to have to be filed. The proper form for getting an extension is Form 8809, and this may be filed either electronically or on paper.

For individuals, the 1099 form has to be filed along with their general income tax. This will usually be done on a schedule C along with your 1040 form. Remember, even if you did not get a 1099 from a company that has employed you to perform work for them they have more than likely filed one with the government.

If you made income, you must report it. If the company which paid you reported this income by sending the 1099 to the IRS as they are required to do, that will be cross-referenced when your return is received. If you did not report the same amount of income, you can be charged with filing a false tax return.