When do I need to issue a 1099 is a very common question by business owners. A 1099 states the payment you’ve made throughout the year to non-employees. It is a tax document that tells the IRS what you paid to the individual. This includes individuals such as contractors or subcontractors. A 1099 is simply a summary of payments. Once your total payments to an individual get over a certain threshold the IRS requires you to issue a 1099. Once it is over $600 for the year you need to issue a 1099. So, this is the dollar amount to answer the question of when do I need to issue a 1099?
When do I need to issue a 1099 by?
Once you exceed that $600 amount you need to issue the 1099 by January 31st after year-end. So you get through the end of December and add up all the payments for that year, then create a 1099 and send that to your contractors. You have 30 days. If you can’t get that done there needs to be an extension requested by the IRS. This is just one piece of your tax preparation that’s needed to help you get your tax return completed in a timely manner!
What will I need to issue a 1099?
You need to have a W-9 on file. A W-9 is simply the name, address, and social security number of the individual working for you. It’s best to get that sooner than later, like when you hire the individual. Having that W-9 to begin with will allow you to quickly and easily send their 1099. Filing your tax forms and returns timely helps everyone!
How do I issue a 1099?
Another common question is how do we do this? You can always print out a form, handwrite it, then send it or mail it into the IRS and to your contractor. Even easier is that you can also do it online either at www.irs.gov or through online bookkeeping softwares or apps. If you don’t have any of these systems in place we can help you with that so next year is easier.
Once payments have exceeded $600 you’ll issue the 1099 to individuals and it will be a deductible expense to you. You do need to issue 1099s each year as required. If you were ever audited the IRS is going to look at your expenses and if one of these hasn’t been issued you will have penalties and fines.
If you have any questions or need help with any of these forms please feel free to reach out to us.
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Steve enjoys getting to know clients and hear their unique stories and the lessons learned which has brought them where they are today. One of the reasons he enjoys what he does is the ability to show the outcome that can be achieved with different choices. He also enjoys continually learning.