Five Tips for Sending Out 1099s

It is time to file your 1099 forms to meet the January 31, 2015 deadline.

tax 1099 formYou may just be getting over the fact that we’ve headed into 2015, but don’t forget an important deadline which pops up soon after ringing in the New Year!

1099s are to be filed for employees or contractors you’ve paid throughout the year, but they are not necessary for everyone you pay. So, start cleaning up your books and identify to whom you have to issue a 1099 form.

You don’t want to make a mistake as far as 1099s are concerned. The penalty for not filing and sending them out or not doing so by January 31st can vary from $30 to $100 per form, depending on how long past the deadline you get around to doing it. If a business intentionally ignores the requirement, they are subject to a minimum penalty of $250 per statement, with no maximum.

Before you we get to far ahead of ourselves, it is worth noting that you should have a W-9 form on file for anyone getting paid over $600 in a given year. If you are missing one or more, you’ll have to track down the mailing addresses and EIN numbers right away. To download the current W-9 form, go to the IRS website.

Your life will be easier now if you have been tracking all money paid out by name and date throughout the year. If you haven’t kept track, you’ll need to assemble this information, but remember for next year. Make things easier on yourself by tracking this data as you make payments, either in QuickBooks or a simple Microsoft Excel sheet.

Here are our tips for determining who should get a 1099 form:

  1. Send a 1099-MISC to anyone who is paid more than $600 in the last year. This could include rents, services, parts, materials, prizes, bonuses, awards, or other income payments. You don’t need to issue 1099s for payments made for personal purposes.
  2. Do not send a 1099 if a payee is incorporated. Identify vendors by their business name. If the name ends with “Inc.” you can assume such, but should always check with the vendor to be sure.
  3. All lawyers must be issued a 1099 form. Interestingly, the government doesn’t trust that lawyers will report all of their income, so incorporated or not, you are required to send an attorney a 1099 if you paid them more than a penny.
  4. Financiers must be issued a 1099 for interest paid on private loans over $10, but this does not include mortgages or lines of credit.
  5. If you are a property manager, issue a 1099 for all rent received on behalf of your landlords or property owners.

If you are using QuickBooks, it should be easy to identify which vendors need to be issued 1099s. If you need help, Fast Trac Consulting can help you by answering your questions or by submitting, e-filing, and mailing 1099s to appropriate vendors on your behalf.

Are you a do it yourself kind of person? Be careful! 1099s are not simply a download from the IRS website. The forms are pre-printed in triplicate by the IRS, so you must order them, pick them up at an IRS service center, or get them from the post office while supplies last. Once you compile all of your 1099s, submit them to the IRS with a 1096.

Order 1096 forms, 1099 forms, and envelopes NOW and SAVE!

The most popular forms are:

By |2017-03-17T12:19:42-05:00January 2nd, 2015|3 Comments

About the Author:

With more than thirty years of experience in the real estate and property management industry, Gita Faust is more than just a real estate investor; she is also popular for her work as an accountant, consultant, mentor, speaker, QuickBooks Top ProAdvisor, QuickBooks Solution Provider, member of Intuit’s Trainer/Writer Network, and, of course, author. As the CEO and owner of Fast Trac Consulting, Gita is well-known for her exemplary leadership and advisory skills. In fact, she even helped pioneer the adaptation of QuickBooks to suit the needs of professionals in real estate and property management. To share her knowledge and experience with others, she has written a series of courses titled Simplified Accounting Solution, which provides step-by-step guidance for those working with QuickBooks.

3 Comments

  1. Denny Soinski January 20, 2018 at 11:51 am - Reply

    1/20/2018

    Hi Gita,

    Where did you get the following info: “you are required to send an attorney a 1099 if you paid them more than a penny”? Does this mean that if our company paid an attorney $100.00 during one year for services rendered that we should send this attorney a 1099?

  2. Bridget Beck January 7, 2015 at 6:56 pm - Reply

    1099’s got even more complicated a few years ago. Now you do not 1099 anyone you pay with a credit card, debit card, third party ACH, or PayPal. The credit card companies and PayPal have to create 1099-K forms for these transactions. If you do send a 1099 when you’ve used a credit card to pay someone, you are double-reporting, which can be a violation of IRS rules. All the more reason to have a professional firm help you with 1099’s. Like they say on the TV shows, “Don’t try this at home!”

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