There is a major change regarding W-2 and 1099 filings. In 2018, the IRS issued regulations that virtually eliminated the ability to ask for an extension to file these forms. This change means you must file these forms by January 31, 2019.
Start The Process Now
If you would like us to assist in preparing W-2’s or 1099’s, we urge you to start this process as soon as possible. We understand you may not have final amounts for some of your W-2 or 1099 recipients. However, by starting this process now, we can work together to enter information and finalize in early January to ensure we do not run up to the filing deadline of January 31, 2019.
To Have Froehling Anderson Prepare The Forms
If you have made any payments of this kind during 2018 and would like us to prepare the proper forms, we will need the name, address, taxpayer identification number, type of payment and the amount paid to each recipient.
We must have this information by January 20, 2019, since these forms are due in the hand of the recipient and due to the IRS by January 31, 2019.
The IRS requires that Form 1099 be used to report interest, dividend and royalty payments of $10 or more. Also, a Form 1099 must be issued to report any payments for rent or personal services your business makes to an unincorporated taxpayer when the total of the payments to the unincorporated taxpayer during the calendar year exceeds $600.
Some examples for personal services that might require a 1099 are payments:
- Accounting Services
- Janitorial Services
- Sanitation Services
A Form 1099 must be issued for legal fees and reimbursement of expenses of any amount even if the attorney is part of a corporate entity. You do not need to issue a 1099 to a corporation for which you have documentation on file which evidences that the entity is incorporated. This documentation would be a completed Form W-9 by that corporation.
Penalties for Failure to File by January 31, 2019
If you fail to file a correct information return by the due date to the IRS and you cannot show reasonable cause, you may be subject to substantial penalties. The federal penalties are up to $270 for each IRS copy and each recipient copy for every Form 1099 not issued and up to $100 for each identification number not reported on Form 1099. The best way to avoid this penalty is to have anyone that provides a service for your business fill out a Form W-9 before they receive payment. Minnesota also issues a penalty of $50 per 1099 not issued.
We Can Help
Contact Froehling Anderson so we can prepare the forms for you if you have the information to us by January 20, 2019.