1099s must be issued and filed by January 31, 2025, to avoid late filing penalties.
We must receive the W-9’s you collected and your list of eligible vendors/contractors by January 15, 2025. If we do not receive all the information by this date, we cannot guarantee filing and mailing for the forms by the required deadline.
As a courtesy – please let us know if you do not need this service this year.
If we do not hear back from you by January 17th – we are going to assume that you do not require this service for this year.
You will need to file Form 1099-NEC or Misc for each individual/company (not including C & S corporations) to whom you have paid $600 or more during the year via check, bank transfer or cash. If you do not have a form W-9 for a service provider or contractor that shows they do not require a 1099 then one needs to be filed. The IRS only accepts a valid W-9 form as proof that a vendor can be excluded from this.
You need to issue a 1099 for payments that are made from your trade or business bank accounts that total more than $600 to an individual or vendor. You are not required to report payments made by credit card or payments made from your personal accounts that are not part of your business. Note: other payments may have lower filing thresholds such as interest and royalties please let us know if you have any other special filings.
Payments for the following services/activities need to be reported.
Rents (1099-MISC)
Services performed by someone who is not your employee: whether a contractor or vendor who is a service provider. (1099-NEC)
Payments to an attorney (regardless of type of entity) (1099-NEC)
Prizes and awards (1099-MISC)
Other income payments, i.e., interest on a personal loan
see the full list at https://www.irs.gov/instructions/i1099mec
If you have not already, please request each individual/company who meets the above conditions to fill out the attached Form W-9. You should obtain a new W-9 form each year from each of your vendors. The latest W-9 provided by the IRS shows a revision date of 03-2024. Any forms with a revision date prior to this may not be accepted by the IRS as valid proof.
Misclassification is the practice of classifying employees as independent contractors. Misclassification is illegal regardless of whether the misclassification was intentional or due to a mistaken belief that workers are independent contractors. It is your responsibility for all hiring decisions and employee classification for your business. If you have questions regarding worker classification, you should consult with your legal counsel.
Here is a link to the NJ website that provides guidance on how to classify your workers. Even though this is for NJ most states follow the same general guidelines.
https://www.nj.gov/labor/worker-protections/myworkrights/independentcontractors.shtml
The IRS imposes penalties for failure to file information returns electronically on a timely basis (as well as the failure to furnish returns to payees on a timely basis). In addition, the IRS may also assess penalties if a filer fails to include all the information required to be shown on a return (e.g., taxpayer’s TIN) or reports incorrect information (e.g., incorrect dollar amount).
Here is the current schedule of penalties relating to forms 1099.
If you correctly file late within 30 days of deadline: $60 per form.
If you correctly file late after 30 days but file by August 1: $130 per form.
If you correctly file late after August 1: $330 per form.
Intentional disregard (no filing): $660 per form
Please contact us with any questions.
Cronin, Hanley, VanZile & Lorenzo
17 Kiel Avenue, Suite 1
Kinnelon. NJ 07405
www.chvfirm.com
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