Keeping track of tax returns can be onerous for contractors and corporations. If you haven’t filed your form 1099 this year, you may wonder if the IRS will notice and if you will be subject to a penalty for not filing.
It’s important to learn the IRS filing deadlines and the consequences of filing late or failing to file.
What Are the Form 1099 Filing Deadlines?
The IRS sets due dates for when you need to file form 1099 and when you need to issue forms 1099-MISC and 1099-NEC to recipients. Missing IRS filing deadlines can incur penalties and interest.
Deadline to Issue a 1099-MISC to Recipients
If the IRS requires you to file a 1099-MISC, you must also furnish statements to each recipient. Recipients of 1099-MISC include an individual or an LLC to whom you paid rent, legal settlement costs, or prize winnings during the tax year.
You should report any payments for independent contractors, self-employed individuals, and gig workers (previously reported in box 7 of 1099-MISC prior to 2020) on Form 1099-NEC.
You must issue Form 1099-MISC to each required recipient by January 31. Forms 1099-S, 1099-B, and 1099-MISC (if you are reporting payments in only box 8 or 10) must be furnished by February 15.
Deadline to Issue a 1099-NEC to Recipients
You must issue a 1099-NEC (non-employee compensation) to each person who is not your employee to whom you paid at least $600 for business services. 1099-NEC also covers cash payments for fish for the purpose of resale and certain attorney payments.
You must issue Form 1099-NEC to each required recipient by January 31.
For example, if you paid a freelance graphic designer $1,000 to create your business website, you would need to issue them a 1099-NEC by January 31.
Deadline for Filing Form 1099(s) with the IRS
All 1099(s) except for Form 1099-NEC must be filed with the IRS on paper by February 28, or electronically by March 31. Form 1099-NEC must be filed with the IRS on paper or electronically by January 31.
You must file Form 1099-SB, Seller’s Investment in Life Insurance Contract, by the 1099(s) due dates unless you meet the special exception in Reg. sec. 1.6050Y-3(c).
If the regular due date falls on a weekend or federal holiday, you must file by the next business day. View a list of federal holidays here.
For example, if you paid a contractor $1,000 this year to oversee a construction project at your workplace, you would need to fill out Form 1099-NEC and file it on or before January 31, whether you paper file or e-file.
What Are the State Filing Requirements and Deadlines?
If you plan to file Form 1099-NEC or 1099-MISC with the IRS, some states require you to send them a copy of the forms. Other states participate in the Combined Federal/State Filing Program (CF/SF), in which the IRS is responsible for electronically forwarding your 1099s to your state.
Most states participate in the CF/SF program. Even if your state participates, you must contact your state to verify that they have received the forms and provide any required additional information.
If you live in a state without state income tax (AK, FL, NV, NH, SD, TN, TX, WA, WY), you are only required to file forms 1099-MISC and 1099-NEC with the federal government.
Which States Require Copies of 1099-NEC or 1099-MISC?
If your state does not participate in the CF/SF program, you must file Form 1099-MISC directly with your state. If you live in IA, IL, KY, NY, OR, PA, RI, UT, VA, WV, VT, or DC, you must file on paper or electronically with your state.
Why Are the Due Dates So Early?
1099 deadlines are early in the year because it is easier to detect fraud. Early deadlines help the IRS detect fraud by allowing them to verify income on tax returns.
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What Are the 1099 Late Filing Penalties?
If you miss the deadline to file your 1099 forms, you can still file, but you may incur a late penalty.
The reasons for late penalties include: missing the filing deadline, submitting incomplete or incorrect forms, filing by mail when required to e-file, reporting an incorrect TIN or forgetting to include a TIN, or filing 1099s that are not machine-readable. In these cases, make the appropriate corrections, and send (or re-send) your return to the IRS.
The IRS may reduce or remove your penalty if you show reasonable cause for missing a filing deadline. Reasonable cause is determined on a case-by-case basis, but common valid reasons for failing to file on time include natural disasters or civil disturbances, inability to attain records, death or serious illness, or electronic system issues.
You will have to pay a penalty for returns or statements you file late or fail to file. For example, if you are two weeks late filing ten 1099s, you must pay $50 for each 1099 ($50 x 10) for a total penalty of $500.
What Are the Penalties for Failing to Meet the 1099 Filing Deadline?
The amount of the penalty you face for missing the 1099 filing deadline ranges from $50 to $580 per missed form, depending on how late you submitted it to the IRS. The IRS charges interest on penalties; the amount you owe will continue to accrue until you pay off your balance in full.
Less Than 30 Days Late
Filing a Form 1099 less than 30 days after the due date will result in the IRS requiring you to pay a $50 penalty for each late 1099. The maximum yearly penalty for small businesses is $206,000, and $588,500 for larger businesses.
31+ Days Late But Prior to August 1st
The IRS will charge you a $110 penalty for filing a Form 1099 a month or more after its due date but before August 1st. The maximum yearly penalty for small businesses is $588,500 and $1,766,000 for larger businesses.
After August 1st
Filing a Form 1099 after August 1st, 2023, or failure to file it entirely (except in cases of intentional disregard) will result in the IRS charging you a $290 penalty. The maximum yearly penalty for small businesses is $1,177,500 and $3,532,500 for larger businesses.
You may request extra time from the IRS to file your return using Form 8809.
You may request additional time to provide payee statements by faxing your request to the IRS.
Penalties for Failing to File the 1099 Forms
If you fail to file 1099s, you are subject to stricter penalties unless you can show reasonable cause.
For example, if you submit your IRS return after the filing deadline but before August 1, you must pay $110 for each late 1099. If you do not submit your return, you must pay a much higher penalty of $290 per return.
The penalty for not filing a 1099 is even higher in cases of intentional disregard.
Proving Intentional Disregard
Intentional disregard under IRC 6721(e) applies when the facts and circumstances show that you knowingly or willfully failed to comply with IRS requirements.
The facts must show that you:
- Were required to file
- Knew or willfully disregarded this requirement
- Consciously chose not to file or ignored the duty to file a return that is correct and on time
The penalty for intentionally disregarding submitting forms 1099 starts at $580, and there is no maximum penalty you may be assessed per form.
Penalty for Not Filing 1099-INT
Banks and other financial institutions should file form a 1099-INT for each person to whom they have paid interest, either on paper or electronically, during the year.
This includes:
- Anyone paid amounts of at least $10 or $600 of interest paid in the course of your business reportable in boxes 1, 3, or 8
- Anyone you withheld or paid any foreign tax on interest
- Anyone you withheld federal income tax and did not refund under the backup holding rules
The financial institution must also send a statement to the recipient who was paid the interest. The IRS penalizes businesses for not providing recipient copies; these penalties can increase over time.
Penalty for Not Filing 1099-R
You must file form 1099-R for each person to whom you have made a designated distribution of $10 or more from profit-sharing or retirement plans, any IRAs, annuities, pensions, survivor income benefits, insurance contracts, disability payments, and charitable gift annuities.
You must give a copy of the 1099-R to the IRS, the recipient of the distribution, as well as the recipient’s state, city, or local tax department. This form must contain both the payer and recipient’s name, address, and TIN.
Penalty for Not Filing 1099-B
Form 1099-B records proceeds from broker and barter exchange transactions. A broker or barter exchange must file 1099-B for each person:
- For whom they sold stocks or commodities, regulated futures contracts, foreign currency contracts, forward contracts, options, etc., for cash
- Who received cash, stock, or property from a corporation that had its stock acquired in an acquisition of control, or had a significant change in capital structure reportable on Form 8806
- Who exchanged services or property through a barter exchange
What if a Business Does Not Issue a 1099?
A business must file form 1099-MISC for each person or non-incorporated entity they paid at least $600 in business expenses like rent or $10 in royalties, and form 1099-NEC for non-employees it paid over $600 for business reasons that tax year.
A business must issue form 1099-NEC Copy B and Copy 2 to any business or independent contractor it paid over $600 in fees, prizes, commissions, and other services performed for the business.
A business does not have to issue a 1099-NEC to the business or contractor if:
- Payment was only for physical products or goods (not services)
- The business you paid is an S-corporation or C-corporation (unless you paid the corporation for health care or attorney services)
Some independent contractors operate like corporations and do not require a 1099. If you are unsure how the contractor you hired is classified, refer to Form W-9 sent by the contractor when you hired them.
1099 Penalties for Not Providing a Timely Payee Statement
If a business does not issue a correct payee statement by the 1099-NEC or 1099-MISC due date, it will face a penalty. A business must issue forms 1099-NEC and 1099-MISC to recipients by January 31. If a business is only reporting payments in 1099-MISC box 8 or 10, the issuing deadline is February 15.
The penalty amounts for failing to issue a timely payee statement are the same as those for late filing: $50 for each form up to 30 days late, $110 for each form 31+ days late through August 1, and $290 for each form issued after August 1st.
What if You File a 1099 with Incorrect Information?
If you accidentally or deliberately file a 1099 with incorrect information, you may incur penalties. These penalties are the same as if you were to file an overdue 1099: you will pay a penalty for forms with inaccurate information.
You can correct an inaccurate 1099 by filing a corrected 1099 with the IRS. The correction process depends on whether the error is considered a Type 1 or Type 2 error.
If you fill out a 1099 with inaccurate information but have not yet submitted the form, you can also void the form so that the IRS does not use the information.
What is a Type 1 Error?
A Type 1 error is a mistake on a 1099 form that can be fixed with a single information return.
Inaccuracies considered a Type 1 error include: listing an incorrect money amount; listing an inaccurate code; marking an incorrect checkbox; or filing a 1099 form that should not have been filed.
How Do You Correct a Type 1 1099 Error?
To correct a Type 1 error, you must prepare a new 1099 form. Locate the “CORRECTED” box at the top of the new 1099 and mark it with an X. You can choose to write the date, but this is optional. Fill out the 1099 form again with the correct information.
What is a Type 2 Error?
A Type 2 error is a mistake on a 1099 form that can only be fixed by filling out two forms: a corrected information return and a separate 1099.
Inaccuracies considered a Type 2 error include:
- A missing Taxpayer Identification Number (TIN), like an SSN, EIN, QI-EIN, or ITIN;
- An incorrect TIN;
- An incorrect payee name; or
- A 1099 filed using an incorrect 1099 form.
How Do You Correct a Type 2 1099 Error?
Correcting a Type 2 error requires two separate forms.
On the first 1099 form, locate the “CORRECTED” box at the top of the new 1099 and mark it with an X. You can optionally choose to write the date. Write the original payer, payee, and account number information as it was written on the incorrect form. Then fill out all money amounts as -0- (zero).
On the second 1099 form, fill out the second form with the correct information, like you would an original form. Do not mark the “CORRECTED” box.
When to Void a 1099
If you make a mistake while filling out a 1099 form but have not yet sent it to the IRS, you can mark the 1099 as void to prevent the IRS from processing it. A 1099 can only be voided before it has been submitted. After submitting the 1099, you must submit a corrected form to fix an error.
To void a 1099, locate the “VOID” box at the top of the 1099 and mark it with an X. Fill out the rest of the 1099 as normal; do not mark it as corrected, and do not cut or separate the forms. Send the full page to the IRS, including the voided form.
Why Void a 1099
Voiding a 1099 form allows the IRS to leave out inaccurate information while still processing correct information on the form.
For example, if you have multiple 1099 forms on one paper, the IRS will only exclude information on a form marked as void. As the non-voided forms will still be processed, you will not need to fill them out again; you will only need to redo the form with the incorrect information.
Since the IRS does not process a form marked as void, you will not need to submit a corrected 1099 and will not be penalized for inaccurate information.
How to Request a 1099 Extension
If you cannot file Form 1099 or provide recipient copies before the due date, you can request an extension from the IRS to avoid penalties for late or incorrect tax returns. You will either need to submit your request on paper, via fax, or electronically depending on what extension you are requesting.
Requesting an Extension to Provide Recipient Copies
If you need more time to provide statements to your payees, you must fax the IRS a letter requesting an extension.
In the letter, you must state:
- The payer name
- The payer TIN
- The payer address
- The type of 1099 form
- That your extension request is for providing statements to recipients
- A reason or explanation for why the statements are delayed
You or another authorized party, such as an agent, must sign the letter before faxing it.
Once you have finished the letter, fax it to the following address:
Internal Revenue Service Technical Services Operation
Attn: Extension of Time Coordinator
Fax: 877-477-0572 (International: 304-579-4105)
The IRS must receive your request on or before the day the recipients should receive their copies. If the IRS approves your request, they will grant you an extension of up to 30 days.
Requesting an Extension to File 1099s with the IRS
Form 8809 allows you to request an extension to file Form 1099s with the IRS. If your request is granted, you will typically receive another 30 days to file Form 1099. You are still expected to pay taxes on time.
Form 8809 can be filed electronically through the FIRE Production System. Upon completion of the electronic filing, you will be granted a 30-day extension period for filing Form 1099.
Extension requests for Form 1099-NEC and Form 1099-QA can only be submitted on paper.
Additionally, to be eligible for an extension on Form 1099-NEC, you must:
- Have experienced a catastrophic disaster or civil event that impaired operations
- Have been unable to file due to unavoidable absence, severe sickness, or death
- Be in your first year of establishment
- Have received payee statements too late to fill out the form in time.
Why an Incomplete 1099 Filing is Not Worth the Risk
Filing an incomplete 1099 can result in high penalty fees and is generally not worth the risk.
This is because when you file an incomplete form, you may be failing to report income, which can cause your tax return to understate your actual tax liability. If this occurs, the IRS has the right to impose an accuracy-related penalty equivalent to 20% of your underpayment.
For example, if your failure to file form 1099-MISC caused you to understate your tax liability by $10,000, you could face a penalty of $2,000 ($10,000 x .20 = $2,000). You may also face penalties for late filing if you cannot resubmit your completed form before the due date.
What Should I Keep In Mind When Filling Out 1099s?
To avoid penalties, keep the following in mind when filling out your 1099s.
1. Know your 1099s
With nearly 20 1099 forms available, it is crucial to know what forms you need and to whom you need to send them. Use form 1099-NEC to report non-employee compensation (like payment made to an independent contractor) and form 1099-MISC for other payments like rent. Prioritize careful bookkeeping throughout the year to ensure your records are accurate come January.
2. Know your deadlines
File forms 1099 (except for 1099-NEC) on paper by February 28th, or electronically by March 31. File form 1099-NEC on paper or electronically by January 31. If you are required to furnish form 1099-NEC to recipients, you must do so by January 31.
3. Know your contractor
Are you dealing with an independent contractor or a corporation? Remember, you do not have to file 1099s for corporations or entities that have elected to be taxed like corporations. Make sure you request an updated Form W-9 from your contractors yearly as their status may change.
4. Know your state
Does your state participate in CF/SF? If it does, the IRS will send your 1099s (including 1099-NEC and 1099-MISC) to your state. If it does not, you are required to directly send form 1099-MISC to your state. If your state does not have a state income tax, you only need to file federal returns.
5. Know your risk
To avoid being accused of intentional disregard, make sure you check the appropriate 1099 boxes when you fill out your Schedule C. The form will ask if you were required to file 1099s (part I), and if you did or will file 1099s in the future (part J). If you answer “yes” to the first question and “no” to the second, the IRS may flag your return.
6. Know your limits
If you have a complicated tax situation and don’t know where to start, Tax Shark can help you file your 1099s without risking high penalties. Contact Tax Shark for a review.
FAQs
Here are the answers to some common questions about filing late or failing to file 1099s.
Yes. Both you and the IRS receive a copy of your 1099 form. If you fail to file your 1099, the IRS will see a discrepancy between your income reports.
The IRS uses computerized matching using either a person’s employee identification number (EIN) or social security number (SSN) to match 1099s to the payer’s tax returns.
Not everyone is required to file 1099s electronically, but if you are and fail to do so, then there could be a penalty of up to $280 per return.
Any amount $600 or more will require a 1099 to be issued. This amount includes multiple payments within the same tax year.
To correct a 1099 filing, submit a new form of the same type but mark the box labeled “CORRECTED” at the top and then fill out the accurate information.
No, the statute of limitations on a 1099 is 3 years. If the IRS finds anything wrong with your 1099 or that you neglect to file one, they have 3 years to take action. 1099s must still be filed by the appropriate deadline.
