Ohio 1099-NEC Filing Requirements: What You Need to Know

Form 1099-NEC is a federal tax document used to report payments made to independent contractors and other non-employee service providers. Businesses use this form to inform the Internal Revenue Service (IRS) about these payments. While the form is federal, individual states often have their own distinct filing requirements. For businesses operating in Ohio, understanding the specific rules set by the Ohio Department of Taxation is necessary for compliance, as these state-level obligations exist alongside federal ones.

Determining Your Ohio Filing Obligation

The federal government requires businesses to file Form 1099-NEC for any nonemployee to whom they paid $600 or more during the tax year. While this is a nationwide requirement, Ohio has its own filing mandates that businesses must also follow.

A business is required to submit copies of its 1099-NEC forms to the Ohio Department of Taxation if either of the following conditions are met:

• The business withheld Ohio state income tax or Ohio school district income tax from the payments made to the recipient.
• The payment was made to an Ohio resident, even if no state or school district tax was withheld.

This means that if a business pays an Ohio-based contractor $600 or more, it must file a 1099-NEC with the Ohio Department of Taxation. A state filing is also required if a business withholds Ohio tax from a payment to a non-resident contractor.

Information and Forms Needed for Filing

Before beginning the filing process, a business must gather specific information from each nonemployee recipient. This is accomplished by having the contractor complete and return a Form W-9, “Request for Taxpayer Identification Number and Certification.” This form provides the business with the contractor’s legal name, business name (if different), current mailing address, and Taxpayer Identification Number (TIN), which is either a Social Security Number (SSN) for individuals or an Employer Identification Number (EIN) for businesses.

With the recipient’s data on hand, the next step is to complete the federal Form 1099-NEC for each qualifying payment. This form details the payer’s information, the recipient’s information, the total nonemployee compensation paid in Box 1, and any federal income tax withheld in Box 4. If Ohio tax was withheld, that amount must also be recorded in the designated state boxes on the form.

For businesses required to file with Ohio, an additional state-specific form is necessary: the Ohio IT 3, “Transmittal of Wage and Tax Statements.” This document acts as a summary or cover sheet for the 1099-NEC forms being submitted to the state. The IT 3 requires the business to report its Ohio withholding account number, the total Ohio tax withheld, and the number of 1099 forms being transmitted.

The Ohio Filing Process and Deadlines

The deadline for filing Form 1099-NEC is consistent across federal and state jurisdictions. For the 2024 tax year, businesses must furnish copies to recipients, file with the IRS, and file with the Ohio Department of Taxation (if required) by January 31, 2025. This unified deadline streamlines the process for filers. Missing this date can lead to penalties.

Ohio provides two primary methods for submitting the required 1099-NEC forms and the accompanying IT 3 transmittal. The state mandates electronic filing for any business that files and pays its employer withholding taxes electronically. This is done through the OH|TAX eServices portal, where a filer will use the “W-2/1099 Upload” feature to submit a file containing the 1099-NEC data. The system then uses this to generate the necessary IT 3 summary.

For those who are not required to file electronically, a paper filing option is available. This method involves mailing the completed Ohio IT 3 form along with paper copies of the relevant 1099-NECs. The package should be assembled with the IT 3 on top of the corresponding 1099s and mailed to the Ohio Department of Taxation, P.O. Box 182667, Columbus, OH 43218-2667.

Penalties for Non-Compliance

Failing to comply with Ohio’s 1099-NEC filing requirements can result in financial penalties. These state-level consequences are separate from any penalties the IRS might impose for federal non-compliance. The penalties in Ohio are triggered when a business fails to file required forms on time or files with incorrect information, particularly when Ohio tax was withheld.

The state may assess a late-filing penalty, which is calculated as the greater of $50 per month (up to a maximum of $500) or 5% of the tax due per month (up to a maximum of 50%). This structure means that even if the return results in a refund or no tax due, a minimum penalty can still apply for simply filing late.

Furthermore, a penalty for late payment of the withheld taxes can also be levied, which can be up to 50% of the tax due. It is important for businesses to recognize that these penalties can be applied concurrently.