As we swiftly move into 2024, we will soon find ourselves at the 1099 filing deadline. If you made payments in the course of your trade or business during 2023, you may need to file 1099s to report those payments. The deadline for filing these forms is January 31, 2024.
Additionally, as we discussed in the SDK Tax Update on December 13th, the Taxpayer First Act (TFA) passed during 2023 changed the e-file threshold to 10 total returns across all different informational returns (1099s, W-2s, Form 941, etc) beginning with filings in 2024 that includes these returns for calendar year 2023. Previously the e-filing threshold was 250 total returns. This means you may be required to e-file 1099 forms that you have previously prepared yourself and filed with the Internal Revenue Service (IRS) by filling out the red copies of the forms and mailing them in.
How do I know what 1099s I need to file?
The following amounts should be reported on Form 1099-MISC for each person whom you have paid during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- At least $600 in:
- Prizes and awards
- Other income payments
- Any fishing boat proceeds
- Medical and health care payments
- Crop insurance proceeds
- Gross proceeds paid to an attorney
- Nonqualified deferred compensation
The following amounts should be reported on Form 1099-NEC for each person to whom you have paid during the year:
- At least $600 in:
- Services performed by someone who is not your employee (including parts and materials)
- Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish
- Fees paid to an attorney
You must also file Form 1099-MISC and Form 1099-NEC for each person from whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment. Additional information about 1099-MISC and 1099-NEC filing requirements and instructions can be found on the Internal Revenue Service website.
How do I get the information needed to file 1099s?
Form W-9 should be used to request the necessary information from businesses and individuals to which you have made payments that may be reportable on a 1099. This information includes their name as shown on their income tax return, federal tax classification, address, and social security number or employer identification number. It is best to collect this information throughout the year as payments are made to new vendors or individuals, so that you have it on hand at year end for any that will require a 1099 to be filed.
How do I e-file my 1099s?
With the change to the new e-filing threshold of 10 returns, the IRS has created a new online portal know as the Information Returns Intake System (IRIS). You can e-file any Form 1099 with this new system in 2024 and it is available for free for any size of business, but you must have an account set up to use it. Setting up an account could take up to 45 days, so there may not be time to get everything set up for this year’s filings, but make sure to get your account set up so you are ready to use it when filing season comes around again next year. If you need assistance in e-filing your 1099s, please reach out the SDK.
If you have any additional questions about filing 1099s, please reach out to your SDK advisor.