Have you collected the required W-9Forms to fill out Form 1099 for 2020? If you answer is “No”, you may miss to file 1099 tax forms within the due date. When you miss to file 1099 tax forms with the IRS within the deadline, the IRS imposes heavy and hefty penalties.
Getting tensed about the word “Penalties”? don’t worry! We have provided another way to get rid of IRS penalties. You can file an extension by last day when the 1099 Forms are due to the IRS for 2020. We’ll let you know about filing an extension to the IRS by providing a valid exception.
When do you need to file Form 1099 NEC?
Before filing a 1099 tax forms, first check if you need Form 1099 NEC. Here are the requirements, and if you meet one or more of these requirements, you may need to file Form 1099 NEC with the IRS. You need to provide the respective copy to your contractors.
If you have paid to someone during the course of your trade or business, you need to report that payment to the IRS. For reporting such payment, a 1099 NEC is filed for everyone who has been paid:
- $600 or more as prizes or rewards, professional service fees, referral fees etc.
- Payments made to attorney’s for performing services.
- The payments made for purchasing fish from the person involved in trade of catching fish.
How long it takes to file a Form 1099 NEC?
1099 NEC is relatively short Form to fill out. As long as you have your data ready, you may be able to complete your 1099 NEC in just a few minutes.
The most challenging part is figuring out how much you paid to each non-employee, the reason to pay, and where the amount is reported on the Form. ifyou don’t collect W-9 Forms from your vendors, it may be time-consuming to obtain their tax ID, full legal name, and a valid address.
We recommend you to collect W-9 Form from each of your contractor before making any payments, to avoid last-minute delays. To save your time and money, use a 1099 online service provider like Form 1099 online.
What is the due date to file 1099 NEC Form for 2020?
The IRS has made a major change to 2020 tax reporting that will impact business owners and tax professionals. Form 1099 NEC has recently been released. From past few years these payments were reported using 1099 MISC. PATH Act 2015 has changed the deadlines to report NEC with 1099 MISC. due to this IRS brought back old 1099 NEC. The deadlines were the same to report NEC using new tax form. But the reporting process was changed. If you prepare Form 1099s for any of your clients, the most significant change is the date the Form is filed with the IRS. All 1099 NEC Forms must be distributed to the recipients and filed with the IRS by February 1st, 2021.
What if you miss 1099 NEC deadline?
The consequence of missing the filing deadline is fine imposed by the IRS. There are late filing penalties, penalties for failure to furnish correct payee statement, and penalty for failure to file electronically.
When you’re close to the filing deadline and not sure if you would meet the deadline, then it is preferred that you file for an extension. If you’ve already missed the deadline, then file as soon as possible. Also, prepare early for next year and make sure you collect W-9 Forms from your contractor before making any payments. There is no automatic 30 days extension for filing 1099 NEC. You can request an extension to file 1099 NEC through sending a letter to the IRS mentioning the reason for the delay.
1099 Form maximum penalties for businesses
Individuals and businesses that make payments of non-employee compensation to individuals must give payee Form 1099 NEC by the end of January of the following tax year in which the income was paid.
- If the business fails to do so, the penalty against the business varies from $50 to $110 per form with $500,000 maximum per year.
- The business intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $280 per form, with no maximum.
Valid exceptions for filing 1099 Form delay
The IRS will not impose penalties upon a business if it demonstrates reasonable cause for the delay in filing. The meaning of reasonable cause includes events occurring beyond the taxpayer’s control, such as an office fire or computer meltdown. The taxpaying business must show that it took all reasonable steps to avoid the lateness and that it took action to mitigate the delay in filing the forms. In addition, the IRS will overlook inconsequential errors in forms that necessitate correction and re-submission.
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