The deadline to file your 1099 is coming up fast! If you have yet to submit it or need more time to file before the due date, we will help guide you through the process to request an extension. In this article, you'll learn what a 1099-extension is and why you need one to avoid a 1099 late filing penalty, as well as how to fill out the correct form so that your extension of time request can be processed without any errors.
You can request extensions by using Form 8809. You can send forms 8809 by mail to the IRS. After all, the IRS mailing address is printed on the forms. The IRS highly suggests that you e-file to submit Form 8809.
It is not necessary to give a justification for the extension request. However, since you are not granted an automatic extension to file after the 1099-NEC due date, you can apply if your business meets certain hardship circumstances. You can find them on the Form 8809 online.
Regardless of the form of 1099, the dates they need to be sent out and submitted to the IRS are the same. The 1099-NEC, 1099-MISC, and 1099-K are common examples of this. Depending on the type of 1099, there are slightly different deadlines.
The IRS requires businesses to send out 1099 forms by January 31 to give recipients enough time to file their taxes. This deadline is true for all 1099 forms. If January 31 falls on the weekend, the due date to send the forms to the recipient and IRS gets moved over to the next business day.
Reintroduced in the 2020 tax year, Form 1099-NEC is now used for non-employee compensation of $600 or more to a payee. By February 1, 2021, this document should be sent to the IRS, either on paper or electronically, and distributed to recipients.
The IRS must receive Form 1099-MISC, as well as all other 1099 forms, by March 1, 2021 if filed on paper, or March 31, 2021 if filed online.
The IRS grants an automatic 30-day extension to February 28 to business owners who requests one for their 1099. Maybe you need more time to categorize tax receipts or you have a family emergency, whatever it is, if you need more time to file, you can be granted a 30 day extention.
An extension can be obtained either using the Filing Information Returns Electronically (FIRE) system to fill out Form 8809 or by physically file out and mail Form 8809. Form 1099 extension of time requests must be postmarked or mailed by February 28 or electronically filed by the due date of March 31.
In regards to Form 1099-NEC, there is no automatic 30-day extension. The IRS will not accept the excuse "I lost my 1099, so I didn't file". You can still request an extension, but it will not be granted automatically. An extension to file is only available for those under some hardship circumstances and you can only request one extension at a time.
Backup withholding may also apply to non-employee payments if the payee has not submitted the payer with a taxpayer identifying number or if the IRS tells the payer that the Taxpayer Identification Number provided was incorrect or wrong.
If you obtain an automatic extension, you may request one additional extension of not more than 30 days by filing a second Form 8809 before the conclusion of the first extension period.
This second extension will only be allowed if the business under some specific circumstances:
Additional information is needed to describe why you need more time to file form 1099. You must provide the required documentation to demonstrate your eligibility for the additional 30-day extension. Be sure to sign the thorough explanation and add your taxpayer identification number and company name.
The due date for form 1099 is to help the IRS detect fraudulent returns by giving them sufficient time to verify income for individual reporting. Be sure to stay on top of the filing deadline so you do not need to file for a 30-day extension. However, if you need more time, we hope this article helped you navigate through 1099 extensions.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?