Information Returns: 1099s; W-2s etc.
Information returns are due to the IRS at the beginning of each fiscal year. Whether you've made payments to
thirds parties or to employees, you might need to report these payments. Various forms exist (W-2, W-2G, 1042-S, 1094-C, 1095, 1097, 1098, 1099 1099-NEC, 3921, 3922, 5498, 8027) with various deadlines and rules. We focus this short article on information returns 1099.
As we approach January 31st, we are dealing with a new information return: Form 1099-NECAs we approach January 31st, we are dealing with a new information return: Form 1099-NEC. NEC stands for Non-Employee Compensation. Typically, contractors paid during the fiscal year 2020 will receive a 1099-NEC.
As a payor, your duty to the IRS is to send a report 1099 with information regarding payments above $600 in the aggregate made to third parties during the year. The deadline is January 31, 2021, and on form 1099-NEC the IRS did not allow an extension to file (exceptions apply).
It is highly recommended you keep a copy of W-9s requested to your business partners during the course of the year. W-9s should be updated each fiscal year, so you can report the information accurately to the IRS.
Regarding the redesigned form 1099-MISC, and following the IRS instructions, the recipients should receive notice by January 31, 2021 and you must file the form with the IRS no later than February 28, 2021 (or March 31, 2021 if filing electronically). You might as well request a 30-day extension to file.
Failure to comply with the information reporting may trigger penalties.
Contact your legal/tax advisor for additional questions and to help you comply with the information returns this year.