New York 1099 Filing Requirements: What You Need to Know

Businesses and individuals making payments to independent contractors or other non-employees have additional tax responsibilities beyond federal reporting. New York has specific 1099 filing requirements that must be followed to avoid penalties. Understanding these rules is essential for compliance, whether you’re a business owner, freelancer, or accountant handling tax filings.

Failing to meet state regulations can lead to fines and complications with the New York Department of Taxation and Finance. To ensure compliance, it’s important to know which forms are required, who must file them, and key deadlines.

Which 1099 Forms Are Subject to NY Filing

New York requires the filing of certain 1099 forms when payments meet specific criteria. The most commonly reported form is the 1099-NEC, used to report nonemployee compensation of $600 or more. This applies to independent contractors, freelancers, and self-employed individuals providing services. If a business pays a contractor for work performed in New York, this form must be submitted to both the IRS and the state.

The 1099-MISC is required for various types of income, including rent, royalties, and prizes. If a landlord receives rental income from a property in New York or an individual earns royalties exceeding $10, the state mandates reporting. Payments for legal services, even if made to a law firm or corporation, must also be reported.

Financial institutions must report interest and dividend income using 1099-INT and 1099-DIV forms. Banks, credit unions, and investment firms must file a 1099-INT for interest payments of $10 or more and a 1099-DIV for dividends of the same amount. If a New York resident earns taxable interest or dividends, these forms must be submitted to the state, even if the payer is located elsewhere.

Who Must Submit 1099 Forms

Entities responsible for issuing 1099 forms in New York include businesses, nonprofits, and individuals making reportable payments. Any entity engaged in a trade or business that pays an eligible recipient must comply with state reporting rules. This applies even if the payer is not physically located in New York, as long as the transaction has a connection to the state. Sole proprietors, partnerships, corporations, and LLCs must file when making qualifying payments.

Employers issuing W-2s for employee wages do not need to provide 1099s to those same individuals. However, businesses hiring both employees and independent contractors must ensure proper worker classification. Misclassification can result in penalties, audits, and liability for unpaid employment taxes. The New York Department of Taxation and Finance may use 1099 filings to verify worker classifications.

Financial institutions and brokerage firms must also submit 1099s when reporting interest, dividends, and other taxable distributions. Even if an institution is based outside of New York, it must file if the recipient is a New York resident.

Income Sourcing Rules

New York determines taxability based on where income is sourced. Payments are considered New York-sourced if the service or activity generating the income occurs within state borders. This applies even if the payer is based elsewhere or if the recipient resides outside of New York. For example, a consultant living in Florida but completing a project for a New York-based company while physically present in the state would have income sourced to New York.

Pass-through entities such as partnerships and S corporations must report income attributable to New York operations. If a nonresident partner or shareholder receives a distribution from a business operating in New York, that income must be reported.

Real estate transactions follow a location-based sourcing rule, meaning rental income from New York properties is taxable within the state, regardless of where the property owner resides. Stock options, commissions, and performance bonuses tied to work performed in New York are also subject to sourcing rules. If a salesperson earns a commission based on deals closed while working in New York, that income must be allocated to the state, even if their employer is headquartered elsewhere.

Minimum Payment Threshold

New York follows federal guidelines for determining whether a 1099 must be issued, but state-specific nuances can impact reporting obligations. The general threshold for reporting non-wage payments is $600. However, certain types of income have lower thresholds. Interest, dividends, and royalties require reporting if they exceed $10.

New York mandates reporting for some payments that may not trigger a 1099 at the federal level. Gambling winnings must be reported when they reach $600, even if federal thresholds vary based on the type of wager. Certain legal settlements, including damages awarded in New York courts, may also require reporting if they meet state-defined criteria.

Filing Deadlines

New York’s 1099 filing deadlines generally align with federal due dates. The deadline for furnishing recipients with their copies is January 31, covering all 1099 forms, including 1099-NEC, 1099-MISC, and 1099-INT.

For state submission, New York follows the federal e-file deadline of March 31 for electronic filers. Paper submissions are due by February 28. The state encourages electronic filing, particularly for businesses submitting multiple forms, as it streamlines processing and reduces errors. Businesses using the Combined Federal/State Filing (CF/SF) Program may not need to send a separate copy to New York, provided the IRS transmits the data. However, this does not exempt businesses from ensuring compliance with state-specific reporting rules.

Penalties for Noncompliance

Failing to file 1099 forms on time or submitting inaccurate information can result in financial penalties from the New York Department of Taxation and Finance. The state imposes fines for late filings, incorrect taxpayer identification numbers (TINs), and failure to provide recipient copies.

The penalty for failing to file a required 1099 with the state is $50 per form, with a maximum penalty of $100,000 per year for large filers. If a payer willfully neglects to file, the penalty can increase significantly. Providing incorrect or incomplete information on a 1099 can result in a $100 fine per form, particularly if the mistake leads to underreported income. The IRS may also impose separate federal penalties.

Late payments of withholding taxes associated with 1099 income can trigger additional interest and penalties. If a business withholds New York state income tax from contractor payments but fails to remit it on time, interest accrues at a rate set by the state, which is adjusted quarterly. Repeated noncompliance may lead to audits and increased scrutiny.

Revising a Filed Return

Errors on a previously submitted 1099 must be corrected promptly to prevent discrepancies that could trigger audits or penalties. New York allows filers to submit amended 1099 forms to correct mistakes such as incorrect payment amounts, misspelled names, or invalid TINs.

For electronic filers, corrections should be made through the same e-filing system used for the initial submission. The IRS’s FIRE (Filing Information Returns Electronically) system allows for amended filings, and if the original 1099 was submitted through the CF/SF Program, the IRS will forward corrections to New York. If the payer did not use the CF/SF Program, a corrected 1099 must be sent directly to the state.

Paper filers must submit a new 1099 form with the corrected information and mark it as “Corrected” at the top. A copy must also be provided to the recipient. If the correction involves withholding tax errors, an amended Form NYS-45 (Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return) may also be required.