What do I do if I forgot to send out 1099s on time?
If you forgot to send out your 1099s on time – don’t fret, you can still send them. If your business hires independent contractors or freelancers, you may be required by the IRS to file Form 1099-MISC.
Form 1099-MISC is used to report total annual payments of at least $600 made to self-employed people during the previous calendar year. Copy B must be given or mailed to the recipient by January 31 of the following year. Copy A, along with form 1096 should be sent to the IRS by February 28th. If you forgot to send a 1099 to an independent contractor, you’ll still want to do so, even late. If you don’t and are audited by the IRS, you could find yourself in trouble. In addition, be sure to call the recipient and let them know you’ll be sending the 1099 as soon as possible.
For details on how to comply with the 1099 reporting rules, download the Form 1099 instructions from the IRS website or consult with your tax professional.
Determining if a 1099 is needed
The purpose of the 1099-MISC is similar to that of the W-2, but the goal is to report income made by non-employees. The IRS uses this form to help track the income of self-employed workers. Without a 1099, it’s almost impossible for the IRS to figure out how much income a particular self-employed person made. This could lead to under-reporting of income, which is why even if you forgot to send out 1099s on time, it’s important to do so.
The key here is whether or not the person who worked for you is self-employed. Obviously, this excludes employees who should receive a Form W-2 by January 31 to report their compensation (wages, salaries, bonuses). This also means you don’t have to send out a 1099-MISC to corporations who provided services to your business. You can always reach out to a freelancer or contractor to confirm if they need a 1099.
For current information on 1099s, see these articles: