What Do I Need To Know About 1099-NECs?
With January fast approaching, it’s important for business owners to start preparing their 1099-NECs. If you want to stay ahead and get everything in order before the deadline, this episode is for you! We discuss whether or not a transaction needs a 1099, what the process for filing is, and what will happen if you missed filing a 1099. [01:07] Fast Facts About 1099-NECsIf your business pays a subcontractor or vendor, whether it’s an individual or a company, a total of $600+, you need to request a W9 so you can send them a 1099-NECIf you received a 1099-NEC as a contractor, you must report this income to the IRSBe it one-time or accumulative, as long as the total payment is over $600, you need to file a 1099-NEC[04:05] When It Is NOT Required to File 1099-NECsPayments to C or S CorporationsEmployees Payments for merchandise, telephone, freight, or storage Payments to non-U.S. citizens performing work outside of the U.SPayments made via Credit Card or PayPal[06:25] 1099-NEC Preparation Made EasyStep 1 – Collect a W9 from all contractors before you payStep 2 – Fill out the 1099-NECStep 3 – Send a copy of the 1099-NEC form to the contractorStep 4 – File a copy of the 1099-NEC with the IRS and State (if required)For contractors who are non-U.S. citizens - get an accomplished W8-BEN or W8-BEN-E instead[08:54] Penalties for Failing to File a 1099-NEC1099-NECs must be filed at the IRS and sent to the recipient by January 31st of the following yearThe fine will depend on how late you are[10:16] Different Types of 1099sThere are over 15 types of 1099 forms that are used for various purposes[12:30] Final ThoughtsDo that legwork now so you can get on top of the forms neededUtilize software to make processing and filing easierKey Quotes“If you are the one paying the contractor, you are the one that files the 1099-NEC.” - Mike Jesowshek“Sometimes it's hard to get a W9 from someone after the fact so just ask for it upfront. Again, one rule of thumb before you pay anyone, collect a W9 from them.” - Mike JesowshekResources MentionedBlog Post: https://www.taxsavingspodcast.com/blog/what-do-i-need-to-know-about-1099s-for-business-ownersSoftware: https://www.track1099.com/ Downloads: IRS: Instructions for Forms 1099-MISC and 1099-NECIRS: Form 1099-NECIRS: Form 1099-MISC--------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a call at 844-327-9272 or send your questions to us at: [email protected]