You should start preparing, filing, and delivering 1099 form as early as possible. Most businesses tend to underestimate the period required for collecting and confirming all information necessary for this process and end up being caught up by the deadline. It is best if you ensure that all vendors and contractors have issued you with w-9 form before they receive their first payment as this documentation will profoundly assist you in preparation of 1099 forms.
Individuals and businesses that give payments of miscellaneous income to service providers are expected to issue them with 1099 forms by the end of January or in most cases February of the year following the tax year which is the year when the income was paid. These are people you pay for services that are not your employees. This year, some payers were lucky as IRS gave them a reprieve until 16th of February. This means that the payers should wait a little longer before receiving an email.
Some organizations send these forms at the same time they send checks to avoid sending a form later. Contractors should not assume that they are lucky and off the hook if they do not receive it by the end of January. However, there are penalties for businesses who issue these forms late as this may inconvenience the contractors and IRS.
Why it is important to have updated addresses of the contractors
Whether you have the contractors’ address, it is vital to confirm it and ensure that it is correct because the information is reported to the state tax authority and IRS based on the contractors’ Social Security number. Contractors should update their address directly with the company to ensure that they see all the forms that IRS sees.
Moving forward in 2018, ensure that you have form w-9 from all your contractors before they get paid as this will save you a lot of pressure and headache trying to track down their EINs and addresses. Do not ignore the process to ensure that you finish up the procedure before the end of January as this will save you penalties unless you have reasonable causes of delays to show if you get caught up by the deadline.
For more information on how a professional accounting firm can help you prepare contact us today!
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