Are You Required to File Informational Returns?

If you use independent contractors to perform services for your business and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses. In addition, you will be subject to penalties for failure file the informational returns with the government and failure to provide copies to the payees.

It is not uncommon to have a repairman out early in the year, pay him less than $600, then use his services again later and have the total for the year exceed the $600 limit. As a result, you may have overlooked getting the information needed to file the 1099s for the year. Therefore, it is good practice to always have individuals who are not incorporated complete and sign the IRS Form W-9 the first time you use their services. Having a properly completed and signed Form W-9 for all independent contractors and service providers eliminates any oversights and protects you against IRS penalties and conflicts.

IRS Form W-9, Request for Taxpayer Identification Number and Certification is provided by the government as a means for you to obtain the data required to file the 1099s from your vendors. It also provides you with verification that you complied with the law should the vendor provide you with incorrect information. We highly recommend that you have a potential vendor complete the Form W-9 prior to engaging in business with them. The form, available from this site, can either be printed out or filled-in onscreen and then printed out. The W-9 is for your use only and is not submitted to the IRS.

In order to avoid penalties, copies of the 1099s need to be sent to the IRS by the last day of February. They must be submitted electronically or on optically scannable forms (OCR forms). The recipient's copies of the 1099 must also be provided to the independent contractor no later than January 31st following the close of the tax year in which the services were rendered.

This firm prepares 1099s in OCR format for submission to the IRS with the 1096 submittal form. This service provides recipient and file copies for your records. Use the worksheet to provide us with the information we need to prepare your 1099s.

Please attempt to have the information to this office by January 20th, so that the 1099s can be provided to the service providers by the January 31st due date. If you have questions, please call.

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