Prepare Now for Easier 1099s in January ’18

Now is the time to contact vendors for any missing W-9 forms, so that you have a less frenetic year-end.

In fact, we recommend that you obtain a vendor’s W-9 before you pay any of their invoices. Don’t wait to the end of the year to begin the process.

If your company uses  independent contractors, you need to send them a 1099 form for their taxes.The IRS requires anyone providing a service who is not an employee and was paid $600 or more during the year, to be issued a 1099. There are exceptions for attorneys who have no dollar threshold, and payments to corporations, which are exempt from 1099 reporting.

Get detailed instructions for completing Form 1099-MISC.

Important deadlines for filing 2017 Form 1099-MISC

Copy B and Copy 2 of the 1099-MISC form (recipient’s copy)                     January 31, 2018

File Copy A of the 1099-MISC form (IRS copy)                                          February 28, 2018

If filing electronically                                                                                            April 2, 2018

Electronic filing requires software that generates a file according to IRS specifications. When reporting nonemployee compensation payments in box 7 of Form 1099-MISC, the due date remains January 31, 2018.

Recommendations

It is much harder to contact independent contractors for information if their services were used sparingly, or if they no longer provide services. That’s why we recommend that you:

• Withhold payment to any vendor who has not provided your company with an updated Form W-9.
• Keep an electronic file of all W-9 forms received.
• Accept W-9 forms from all vendors – even if you believe the entity may be exempt from 1099 reporting. (Better safe than sorry!)
• Incorporate the Form W-9 requirement in your initial vendor setup and contract agreements.

Remember, taxpayers may be subjected to fines for late 1099 forms, missing forms, or wrong/omitted taxpayer information. To ensure a stress-reduced year end, start collecting any missing taxpayer information during these summer months.

We’ve got your back

From 1099s to 1040s and more, we believe in making tax season as stress-less as possible for our clients. Contact me at mrollins@krscpas.com to learn more about our proactive tax planning and preparation services.