7 Pointers for More Efficient 1099 Filing in 2017
The filing of 1099s for 2017 is fast approaching. Sure you don’t want to pay penalties, or worst charged with perjury when you fail to declare your tax return completely and accurately. And that’s why you’re here looking for an efficient way of filing your 1099s.
Here are some key traps to avoid and things to consider for your smooth and headache-sans Form 1099 filing.
1. Never fail to Mark your calendars
Whether you have that calendar of yours filled with red ink and X’s or you just keep all deadlines in mind, never forget the dates of this annual chore. According to the 2016 instruction, the Filing date of Form 1099s for 2016 is to be filed on or before January 31, 2017, when you are reporting nonemployee compensation payments in box 7. Otherwise, file by February 28, 2017, if you file on paper, and electronically by March 31, 2017. And the due dates for furnishing payee statements remain the same.
2. Make baby steps religiously
Your first baby step is to do your 1099 form quarterly. You won’t love to do your form 1099 in only one sitting. It may take a lot of recollection and receipt scavenging if you only do it when you have to file it in a week’s time.
3. Ask for W-9
Before making any payment, request for a W-9 from any vendor or service provider you pay more than $600. W-9 gives you necessary information e.g the vendor’s mailing information, Tax ID number, and its status as a corporation or not. This can be your best business practice as it will eliminate errors when filing and sending your Form 1099.
4. File your Forms 1099 online or deal with the horrors of sending scannable Forms
All forms must be scannable. Never ever assume that you can print the red form downloaded from the internet and submit it to the IRS. You have to get all the forms from the IRS itself. Additionally, you must avoid to staple, fold, mutilate, wet or put whatever-dirt-or-crease on the form; and make sure you write legibly to ensure that it can be scanned. IRS website warns that a penalty can be imposed for filing forms that cannot be scanned.
To avoid this stringent procedures, you can file your 1099s online with the help of e-Filing Plus. Just simply register to the website, log-in your account and fill out the forms click Add To Cart then Checkout. Isn’t it easy and simple.
5. Expecting your Form 1099 but never came? Don’t request for it!
You don’t have to request for the Form 1099 that you didn’t receive. If you know you must have received one, just declare it on your tax return. One friendly reminder: reporting something on your tax return less than that reported on a Form 1099 will trigger a mismatch on IRS computers, however reporting more income doesn’t trigger a mismatch.
Two unrewarding and costly scenarios may arise when you ask for a Form 1099: 1) the payer may issue the Form 1099 incorrectly. And 2) perhaps you could end up having two Forms, one issued originally (the one you didn’t receive) and another one issued because you inquired. And for such duplicate issues, the IRS computer may consider you had twice the income you did.
6. Avoid Costly errors
Making a mistake to your Form 1099 is very hassle, be it a lot of errors or just a single “0” (which by default is a big error in itself). Receiving Forms 1099 from payers filled with mistakes is even worse! Consider this scenario: an instance may arrive when you know you only received $700 but the payer erroneously added another zero and declared $7000 as payment.
Remember our friendly reminder: reporting higher income is fine, but unreported and under-declared ones are totally disastrous.Thanks to the streamlined method of e-Filing Plus, you and your payer can correct errors in no time, hassle-free. Simply log-in to your account and choose the 1099 form you want to correct, enter your data, click Add To Cart then Checkout. e-Filing Plus will then send the correction forms to the IRS and your desired recipients as well. (Good news, e-Filing Plus have corrections for other tax forms too! Click to learn more about 1099 Corrections.)
7. Be mindful of exceptions
There is a long list of exceptions under the 2016 instruction, but first of these is that payments to corporations are not required to be reported on your Form 1099. This includes limited liability company (LLC) that is treated as a C or S Corporation. Additional ones like attorney’s fee, payments for merchandise, telegrams, telephone, freight, storage, and similar item are also exceptions.
Bonus: In submitting your Form 1099, it must come with a summary and transmittal form, that is Form 1096. This form summarizes the information filed on 1099s. But you can skip this step using e-Filing that automatically calculates the total, and transmits the information.
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