If you've procrastinated on filling out your 1099 form(s), you're not alone. Tax season can be stressful, and with changing 1099 deadlines, it doesn't get any easier.
Reporting the income you paid out to people like contractors and freelancers over the year doesn’t have to be stressful. You can prepare ahead of time by learning about what you need to file and know when deadlines for your 1099 freelance taxes.
Here's what you need to know about when 1099's are due, and how to avoid penalties that you may acquire if you forget to file or file late.
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Types of 1099 IRS Forms
Although people talk about the 1099 as one form, it actually encompasses several types:
- Form 1099-INT: Financial institutions file this form if you receive more than $10 in interest from them during the year.
- Form 1099-DIV: If you own securities or stock and receive over $10 in dividends or capital gains, 1099-DIV is filed by the company/financial institution that paid you the dividends.
- Form 1099-MISC: This 1099 is for rent, royalties, and other income over $600 paid out during the year.
- Form 1099-NEC: The 1099-NEC is a new form that reports independent contractor payments over $600 (non-employee compensation) and is often mistaken for the 1099-MISC.
- Form 1099-K: If you own a business that's made more than $600 in transactions after 2021 through a third-party service like Venmo or PayPal, you’ll receive this form from that Merchant Services Provider.
- Form 1099-B: Financial institutions and mutual fund brokers (eg Fidelity, Vanguard, etc.) send out this form when securities like stock, mutual funds, ETFs, PTPs are sold.
- Form 1099-G: This form reports compensation that comes from unemployment, as well as state and local income tax refunds, taxable grants, and agricultural payments.
- Form 1099-R: If you get a distribution from your retirement plan, such as a 401(k) plan, Roth IRA, or IRS, you'll need to file the 1099-R form.
- Form 1099C - This form is for canceled debt
- Form 1099S - Sales of real estate will require this form to be sent out to the seller or entity paid.
- 1099SA - Distributions from HSA’s (Health Savings Accounts)
- RRB/SSA1099 - For railroad benefits or Social Security benefits
The good news is that, regardless of how many types there are, the Internal Revenue Service keeps the due dates for all the 1099 forms pretty consistent.
When Is The Internal Revenue Service Form 1099 Due?
Although it's unlikely that you'll need to deal with most of these forms, 1099 due dates can change depending on whether you're paper filing by mail or filing electronically. That’s why you want to know what forms apply to you.
Form 1099-MISC isn't used for independent contractors anymore. Now, 1099-NEC is used for non-employee compensation such as contract work done for clients. 1099-MISC is only used for the other miscellaneous payments
While the deadline for issuing the 1099-MISC to recipients has consistently been January 31st, the recent inclusion of the 1099-NEC has given businesses who pay non-employees a little leeway. The current deadline for either of these forms is one day later, February 1st. If that date falls on the weekend, then the deadline automatically moves to the next business day. Paper filers must disclose their 1099 to the IRS by March 1st, 2021. It is possible to file a 1099 extension. Just be sure you do it before the due date. If you lost your 1099, there are steps you can take to easily recover it and file.
If you choose to file electronically, you have until the end of February to send the information returns to the IRS. The Form 1099-NEC is due to the IRS and recipients by February 1. January 31 in future years.
The good news is that the other forms listed above, like the 1099-INT or 1099-K, are also due by January 31st. So you don't need to worry about memorizing different due dates. (The IRS also has a due date chart at the bottom of this page.)
What if You Miss the 1099 Due Date?
Unfortunately, the IRS doesn't take too kindly to businesses or people who miss the Form 1099 deadlines. Procrastinating past the January 31st deadline can cost you - especially if you miss the deadline on multiple 1099 forms.
If you're between one or thirty days late, you'll receive a 1099 late filing penalty of $50 per form. If you're more than thirty days late but you manage to file before August 1st, that penalty jumps to $110 per form.
Anytime you file after August 1st, you’ll pay $280 per form. And, if you intentionally disregard to issue 1099s, then you're looking at an expensive $570 penalty per form.
As long as you manage to file your taxes at some point, the maximum penalty will only be $280 per form. Even if it's been months past the 1099 deadline, you're better off filing the late forms rather than hoping the IRS doesn't notice that you never issued them.
Keep in mind that these related fees aren't totals - they are per form. So, if you forget to file fifty or a hundred 1099 forms, you could be looking at thousands of dollars worth of penalties as a taxpayer. The maximum penalties and specific rules can be found here.
Final Thoughts
Unfortunately, the 1099 deadlines are some of the earliest tax due dates that you'll have to deal with. So, when are 1099 due? The short answer is usually January 31st, but it depends on the specific 1099.
While the IRS has extended the deadline from January 31st to February 1st for the 1099-MISC form as a one-off extension, you're better off filing early than trying to accomplish everything at the last minute. Will the IRS catch a missing 1099? Yes, if you forget to file, the IRS will have the records of your income.
There is a huge penalty for not filing 1099 forms and they can quickly add up the longer you don't report your earnings.
And, if you've procrastinated a little too much past the deadline, go ahead and file anyway. You're better off paying up to $280 per form rather than $570.
We want to make sure you never miss a deadline by giving you automated reminders through our awesome tax and accounting app for freelancers. Try out the Bonsai accounting software for 1099 workers to help ensure you never miss another deadline.
FAQs
Still have questions about 1099 deadlines for the tax year? Here's what you need to know.
How Do I Know if an Independent Contractor Needs a Form 1099-NEC?
Depending on how they filed with the IRS, not all independent contractors may need a 1099-form, especially if they file as a C/S corporation including LLCs that've elected to be taxed as corporations. Freelancers who don't file as as a C or S corporation will need a 1099, but the rules can change depending on the type of corporation they file as.
By the end of January, you’ll send a 1099 to each contractor who you paid more than $600. (An in-house employee of a company would receive a Form W-2 versus a 1099).
For single-member LLCs (disregarded entities) or limited liability partnerships, they will need a 1099 form. However, if they're filing as an S-corporation, you don't need to issue a 1099-NEC to them.
You should always get a W9 from your independent contractor to file, which will identify whether they're an LLC, LLP, or an S-corp or another type of entity. They should also provide you with their taxpayer identification number.
What Happens if I File a 1099 for a Contractor That Doesn't Need It?
If you're keeping track of a hundred contractors or more, it's not always easy to remember who needs a 1099 and who doesn't. The good news is that even if you issue a 1099 to a recipient who doesn't need one, the IRS won't penalize you. Those fees are reserved for missing the deadline.
As long as everyone who needs a 1099 gets one by the deadline, you shouldn't face any penalties from the IRS.
Disclaimer: Tax rules frequently change and are highly specific to your situation. Please consult a qualified tax professional for help on filing your tax returns.
