January 03, 2018
Top 5 Tips for Filing 1099 Tax Forms – Foster Financial
If the term “tax season” makes you gloss over, you’re not alone. Paperwork doesn’t keep the lights on. It does, however, keep the IRS out. Here’s what you need to know about 1099 tax forms for 2018 filing:
- 1099 vs W-2: Companies issue W-2 tax forms to their employees. If you hire workers on a contract basis, you need to issue the 1099 form instead.
- Who Gets Them: There are two recipients of the 1099: the person who worked for you, and the IRS. If you want to avoid an IRS audit, it’s imperative that you follow the rules:
- Issue a 1099 to any worker whom you paid $600 or more in calendar year 2017
- Issue the 1099 forms by January 31, 2018
- What’s changed: In years’ past, the IRS expected 1099 forms by the end of February. Since Congress passed the “Protecting Americans from Tax Hikes (PATH) Act,” businesses now must send 1099s by January 31st. This shouldn’t be a problem. If anything, sending the forms to your workers and the IRS by the same deadline could streamline your tax workload.
- Be Accurate: The caveat to the earlier IRS filing deadline is that errors could slow you down. If a worker has old information, or your business copies over outdated data from a previous filing year, you no longer have a month-long window to fix those mistakes. It’s worth double-checking your forms.
- Be Timely, Avoid Penalties: This needs no explanation. The government isn’t very forgiving, and it charges penalties for late filers.
If you get questions from your contract workers, and you will, know that we’re here to help answer them. The most common (if off the record) question will com from independent contractors who earn just over the $600 minimum filing amount. “Do I really have to file?” Tell them that they do. Since by law you’re required to tell the IRS about the payments, and because your workers are therefore in the IRS system, a simple check by the IRS will alert them if a contractor fails to report income. If they don’t, they won’t face jail time, but the IRS will bill them later.
If you have questions, don’t hesitate to contact us.
