Hi There!
Deadlines
To avoid late filing penalties, the IRS requires 1099’s to be completed and mailed by February 1, 2021. To meet this deadline, SKP will need accurate and complete data in our possession as quickly as possible but no later than January 23, 2021.
All business owners are advised to learn and adhere to the IRS 1099 rules, which are in place to ensure that income is properly reported and taxed by the federal government. The following outlines the pertinent 1099 facts and actions needed.
The Rule
Business owners who paid vendors or subcontractors at least $600 for services including parts and materials, rents, consulting, professional fees including accounting or attorney’s fees, or other income payments in calendar year 2020 will need to issue 1099’s. The limit drops to $10 when paying royalties. Reporting rules exclude corporations and payments made to not-for-profit organizations. They also exclude payments made via credit card or through PayPal, as those third-party processors will issue the appropriate documents directly.
A 1099 works like a W-2 except that it reports compensation paid to non-employees (usually classified as “contractors.” Please call us at 203.933.1679 if you are unsure whether someone in your organization is an employee or a contractor).
Data Needed to File a Form 1099
- Recipient’s first name, and
- Last name
- Street address
- City, State, Zip code
- Federal ID number or Social Security number
- USD amount paid
- Payer’s name, and
- Street Address
- City, State, Zip code
- EIN
- Purpose for the payment (ie: non-employee compensation, interest, rents, royalties, etc.)
[We have an excel template designed to assist in the accumulation of this data. Please call us to obtain a copy.]
Actions
Once it is established that a business owner needs to file and the items listed above have been gathered, the following should be performed in order to have SKP report the 1099 data to the IRS:
- List the information (please use excel for multiple listings).
- Forward the data to any one of the emails listed above.
- SKP will process the 1099’s and will send to the client for review and mailing. If requested to do so, we can mail the 1099s directly to the recipients and send you the Payer copies for your records.
- In all cases, SKP will keep copies as part of your client records.
Thank you.
SKP Staff Robert A Bria, Jill M. St. John, and Sarah Day
