For tax analysts, the beginning of a new tax year always brings along a series of changes in the fillable form 1099 misc reporting. These changes can affect how many 1099 Tax forms a business must send to the IRS and to what extent. The Internal Revenue Service pushed a lot of reporting deadlines back. Specifically, the initial due dates for reporting non-cash compensation for individuals and entities are until January 31st without box 8 & box 1o payments. And, February 15th, 2022 for the payments reported in boxes 8 & 10 respectively.
The new rules are designed to provide more time for taxpayers to report non-cash compensation that exceeds $600 and requires special handling and reporting.
The rules for issuing Form 1099-MISC are changing
Filing of a Form 1099-MISC requires a business to first identify the payee, the compensation amount, and the date of payment. Because the IRS instructs business owners not to issue a 1099 MISC Form for corporations, non-business transactions, payment card transactions, non-employee compensation, etc. Also, it recommends that not issue a 1099 MISC for the payments made below the minimum threshold i.e., below $600. Moreover, don’t issue a 1099 MISC for prior year payments.
IRS fillable form 1099 Misc Reporting changes for year-end
By the end of the year 2021, the IRS has made changes in reporting requirements of the tax form. It has added Box 11 to report “Fish purchase for resale”. Previously these payments were reported on “1099 NEC Box 1”. But from the 2021 tax year, start reporting these payments on “Form 1099 MISC Box 11”. Also, with adding Box 11, the IRS has revised these changes to continuous change. This means the IRS will update the changes when required in a tax year.
Businesses should be aware of these Changes
The changes to Form 1099 MISC reporting for independent contractors and self-employed individuals have a significant impact on how they collect and report such payments.
Businesses who will use Forms 1099 MISC must ensure that they have the appropriate Form 1099 forms on file. Form 1099 MISC may also be used for reporting services performed by other businesses that the company has not incorporated or does not control.
If a taxpayer receives one or more Form 1099 MISC, they must make sure that they report the payment on their tax return.
Failure in 1099 MISC reporting Can result in Steep Penalties
Finally, failure to report 1099 miscellaneous payments can result in paying penalties along with interests. Yes, the IRS collects penalties for failure to report accurate info, not filing Form 1099 on time, & intentionally disregarding. These penalties depend on the time you file the correct 1099 MISC return with the IRS. This means a delay in filing 1099 miscellaneous forms and there will be an increase in the penalty amount.
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