Out with 2020 and in with 2021! It’s time to prepare 1099s!
That’s right, for us accounting geeks, we get to start focusing on getting those 1099s prepared and delivered – and we don’t need FedEx or UPS to get it done!
To get serious for a moment (because we accountants are serious kinds of people) let’s talk about some changes and important considerations for tax reporting in the new year.
General 1099 Information
- The IRS has created 1099-NEC, a new reporting form. New IRS Form 1099-NEC is issued to all individuals who are not employees and all unincorporated businesses that received $600 or more for payment for services, awards, commissions, fees, or services. This includes payments of fees for service to all attorneys, whether incorporated or not.
- Form 1099-MISC is still to be issued for payments of $600 or more for all rents, prizes and rewards, royalties (at least $10) and other income paid to non-corporate taxpayers, including shareholders. 1099-MISC is also used to report payments of $600 or more for medical services, whether the provider is incorporated or not. Also, Form 1099 MISC is used to report gross proceeds paid to an attorney (for instance, for a settlement), Section 409A deferrals, and unqualified deferred compensation payments.
- Forms 1099-INT and 1099-DIV are used respectively, to report interest payments to shareholders and others and dividend payments to shareholders.
- 1099-NEC forms must be filed with recipients and the IRS by February 1, 2021. If you electronically file with the IRS, that filing must be done by March 31, 2021.
- 1099-MISC, INT and DIV forms must be sent to recipients by February 1, 2021 and must be filed with the IRS by March 1, 2021 if you file on paper or March 31, 2021 if you file electronically.
- You must file electronically for any 1099 type for which you have 250 or more recipients, 1099-MISC, NEC, DIV, or INT.
- You should have a Form W-9 prepared by anyone who qualifies per the above criteria in order to obtain social security numbers (SSN) for applicable individuals and Federal Employer Identification Numbers (FEIN) for unincorporated businesses. Note: some unincorporated businesses use the owner’s social security number: That’s fine.
More detailed information is available at IRS websites:
https://www.irs.gov/instructions/i1099msc
https://www.irs.gov/instructions/i1099int
https://www.irs.gov/instructions/i1099div
That’s about it on the 1099 front! Shall auld acquaintance be forgot? Well, maybe, but don’t forget to gather your information and send out those 1099s to your non-employees and other acquaintances!
Any questions or for help preparing your 1099s, please contact your MichaelSilver Tax, A&A, or Client Accounting Services representative at 847.982.0333!