Did you start a small business? If “Yes”, then you take a world full of new taxes, forms, and other responsibilities. As you are new to file 1099 information return forms, you need to know about every 1099 Form. If you made any mistakes when filing 1099 tax forms, IRS may impose heavy and heft fines and penalties.
Still you are in a state of confusion? Don’t worry! That’s why we have provided you information to simplify what are the IRS 1099 Forms. We’ll let you know about different 1099 Forms used for small business owners for the 2020 tax year.
What’s reported on a 1099 Form?
Business individuals report income, both earned and paid during a tax year to individuals using 1099 Form. Individual’s who receive a 1099 Form are treated as non-employees. Simply, a 1099 Forms are series of documents known as “information returns”. The IRS uses these forms to keep a track of the income individuals earn other than as salary.
The IRS uses so many types of 1099 Forms because there are a lot of ways to earn income, and each Form reports a different type of income.
Common 1099 Forms used by small businesses
As a small business owner, you’re likely to both receive and have to file different variations of 1099 Forms. Small businesses and self-employed people are most likely to come across regularly the below 1099 Forms:
As the name implies, Form 1099 DIV is how corporations, shareholders, and the IRS keep track of dividends and other distributions paid. These dividends are paid by businesses to its shareholders. If you own a share in a business that distributes dividends, you’ll receive a 1099 DIV Form. Similarly, if your business sells share and pays dividends to its shareholders. You’re responsible for filing 1099 DIV and send a copy to each shareholder.
Form 1099 INT
1099 INT Form is designed to report interest income above $10 earned and paid in a year. For example, Banks furnish 1099 INT to the customers who earned interest on money they keep in accounts.
As a small-businesses, you’re more likely to deal with 1099 INT forms as a recipient for the interest earned on any business.
Form 1099 K is one of the Form that the majority of small business owners need to be aware of. If you accept payments through payment cards or third-party network transactions, you’ll receive 1099 K. The purpose of the Form is to ensure that online retailers pay appropriate tax on their sales.
Federal 1099 MISC
Form 1099 MISC is one of the most common one for the self-employed people. As a small business owner, if you work with independent contractors, you may receive and submit 1099 MISC Forms.
What small businesses need to know about IRS 1099 Form?
1099 Form series deals with paying and earning money, and that’s pretty much what operating a business is all about. As we mentioned, there are a lot ways to earn income outside of your regular salary, commissions, and bonuses. The IRS keeps a track of all that other income so they can ensure you to pay the appropriate income tax on it. In a nutshell, that’s what all 1099 Forms are designed to do. They help the IRS to keep a track on all outside income earned.
As a small business owner, and self-employed individual, you’ll end up both receiving and sending variant 1099 Form. The only thing you need to do is to report all the income paid and received in a tax year to the IRS using appropriate 1099 Form.
Do you need to submit a 1099 Tax Form?
With all the different 1099 Forms, it can be hard to make bulk of statements about who does or doesn’t need to submit one. But in short, if you paid someone more than $600 for anything other than sales or employment. Then you need to file a 1099 Form.
Given below are the most common scenarios small business owners submit the 1099 Forms to the IRS:
- When you worked with an independent contractor and paid $600 annually, then you’re responsible for submitting Form 1099 MISC.
- If your business sells shares and paid dividends to shareholders, then you’re responsible for submitting Form 1099 DIV.
When to submit 1099 Forms?
Generally, most variant 1099 Forms are due to the IRS by March 31st, 2021 for reporting 2020 tax year payments. However, if you’re reporting payments made to non-employee using 1099 NEC, you’ll need to submit to the IRs by February 1st, 2021. Furnish the 1099 recipient copies by February 1st, 2021. When you’re reporting 1099 MISC box 8, 10 payments, you need to furnish the recipient copy by February 15th, 2021.
In addition, if you choose to fill out and file your 1099 Forms on paper, and submit by mail. Then the deadline is March 1st, 2021.
How to submit Form 1099?
The process of submitting 1099 Forms to the IRS are given below. You can choose any process from the below:
E-file 1099 Form
This method of filing taxes is the most preferrable one by the IRS. According to the IRS, filing 1099 Forms online is faster, accurate, and more secure. In order to file Form 1099 online, you’ll need to use the IRS FIRE system. The IRS also offers lists of approved software and authorized e-file providers to file 1099 Forms.
Mail in your 1099 Form
Small business and employers have the option to mail in Form 1099. To mail the Forms, you’ll need to print the applicable 1099 Forms, and Form 1096. Form 1096 acts as a cover page for each group of 1099 Form.
Work with a tax preparer
The last process is to work with a tax preparer. Anyone can be a paid tax return preparer as long as they have an IRS PTIN. Tax professionals can both fill out and file any necessary Form 1099 and also will fill out and file 1096 Form.
Have you got detailed information about IRS 1099 Forms? File your 1099 Forms easily and conveniently through online. IRS has provided every Business owner to file the Forms electronically through IRS authorized e-file providers. Form 1099 online is one among the best IRS certified e-file provider. We provide you service file 1099 Forms with accurate and secured process.