Not sending out 1099s can be costly. Here’s what business owners are responsible for.
If you used independent contractors such as graphic designers, consultants, and attorneys, you are required by the IRS to send a 1099 if you paid them more than 600 dollars in the tax year at hand. Not doing so can result in a penalty of 250 dollars; that can really rack up quick if you used several contractors throughout the year.
The consultant will need to have received their 1099 from you by January 31st. You have until February 28th to turn it in signed by the contractor to the IRS. If you are filing electronically, you have until March 31st.
Note: you don’t have to send a 1099 out to an entity you paid that is a corporation.
You can learn more about 1099s here on the IRS’s site.
Everyone’s tax situation is different and we’re here to help you meet your legal requirements and navigate any complex tax issue. Give us a call today so we can help.