What Happens If You Miss the Deadline to Send a 1099?

The timely submission of tax forms is a critical responsibility for businesses and individuals. Among these, the 1099 form is particularly important as it reports various types of income other than wages, salaries, and tips. Missing the deadline to send a 1099 can lead to financial penalties and administrative challenges. Understanding these implications is essential for maintaining compliance with IRS regulations.

Who Must Send a 1099

The obligation to send a 1099 form applies to businesses and individuals who make payments to independent contractors, freelancers, or other non-employees. According to the IRS, payments of $600 or more in a tax year for services rendered by a non-employee generally require issuing a 1099-NEC form. This also encompasses payments such as rent and royalties, with royalties needing to be reported if they exceed $10.

For example, a landlord paying a property manager or a business owner hiring a freelance graphic designer must issue a 1099 if the payment thresholds are met. These requirements ensure that all income is accurately reported to the IRS.

Filing Windows

For the 2024 tax year, the IRS requires 1099-NEC forms to be filed by January 31, 2025, regardless of whether the filing is electronic or on paper. Proper organization and record-keeping throughout the year are crucial to meeting this deadline. Accounting software can aid in tracking payments and generating reports, simplifying the preparation process and reducing the likelihood of errors.

Penalties for Late Submission

Submitting a 1099 form late can result in significant penalties. For the 2024 tax year, the IRS uses a tiered penalty system based on how late the form is filed. Filing within 30 days after the January 31 deadline incurs a $60 penalty per form. This increases to $120 per form for submissions made between 31 days late and August 1. After August 1, the penalty rises to $310 per form.

For businesses with gross receipts over $5 million, these penalties double for each tier. Late submissions may also trigger audits, potentially leading to additional scrutiny of financial practices, which can be both time-consuming and costly.

Correcting an Overdue or Incorrect 1099

Correcting an overdue or incorrect 1099 requires careful adherence to IRS guidelines. Once an error or delay is identified, the corrected form should be submitted promptly. The IRS provides instructions for making corrections, including marking the corrected box on the form and entering the accurate information.

Different types of income require specific forms, such as 1099-MISC and 1099-NEC, so it’s essential to use the correct one. The IRS General Instructions for Certain Information Returns offer detailed guidance for addressing various errors, such as incorrect dollar amounts or recipient details, to help mitigate potential penalties.