Article Highlights:
• A business that pays an independent contractor $600 or more in a year must file Form 1099-MISC.
• Form W-9 is used to collect the independent contractor’s data.
• Deadlines for issuing 2013 Form 1099-MISCs are January 31, 2014 (to independent contractors) and February 28, 2014 (to the IRS).
If you use independent contractors to perform services for your business and you pay them $600 or more for the year, you are required to issue them a Form 1099-MISC after the end of the year to avoid facing the loss of the deduction for their labor and expenses. The 1099s for 2013 must be provided to the independent contractor no later than January 31, 2014.
It is not uncommon to have a repairman out early in the year, pay him less than $600, and then use his services again later, and have the total for the year exceed the $600 limit. As a result, you may overlook getting the information needed to file the 1099s for the year. Therefore, it is good practice to have individuals who are not incorporated complete and sign the IRS Form W-9 the first time that you use their services. Having properly completed, and signed, Form W-9s for all independent contractors and service providers eliminates any oversights, and protects you against IRS penalties and conflicts.
IRS Form W-9, Request for Taxpayer Identification Number and Certification, is provided by the government as a means for you to obtain the data required to file the 1099s from your vendors. It also provides you with verification that you complied with the law should the vendor provide you with incorrect information. We highly recommend that you have a potential vendor complete the Form W-9 prior to engaging in business with them. The form can either be printed out, or filled out onscreen and then printed out. The W-9 is for your use only and is not submitted to the IRS. If you don’t have a W-9 for a vendor you used in 2013 and paid $600 or more, you should make every attempt to obtain one.
In order to avoid a penalty, copies of the 1099s need to be sent to the IRS by February 28, 2014. They must be submitted on magnetic media, or on optically scannable forms (OCR forms). This firm prepares 1099s in OCR format for submission to the IRS with the 1096 transmittal form. This service provides recipient and file copies for your records.
Please attempt to have the information to this office by January 20, 2014, in order that the 1099s can be provided to the service providers by the January 31st due date.
If you need assistance or have questions, please give this office a call.