Dec 18 FORM 1099 FILING INFORMATION

In 2023, the IRS finally reduced the threshold requiring electronic filing to any company filing 10 or more total forms of any type.  It is important that employers review and understand the compliance procedures.  Not only will employers face steep penalties for non-compliance, but they will also be required to provide details about the 1099s on their business tax return.

Below are general guidelines to assist in preparing and filing 1099s for 2023.

Reporting

1099 reporting is required on a calendar-year basis and includes the payee’s name, address, social security number, or employer identification number, as well as the amount paid and any related federal income tax withheld.

Form W-9

In order to obtain the social security number or employer identification number from a vendor, use the Form W-9 (Request for Taxpayer Identification Number and Certification) with a revision date of October 2018.  This form meets IRS requirements, while the earlier versions do not.

Form 1096

This is a summary and transmittal form required to accompany the separate information returns when sent to the Internal Revenue Service.  A separate 1096 is required for each type of 1099 return sent.  Additional information and instructions can be found on the Forms & Publications page of the IRS website.

Form 1099-NEC, Nonemployee Compensation

As a reminder, this form effectively replaced the information previously reported in box 7 of the 1099-MISC.  This form must be filed by a payor who, while conducting a trade or business, makes payments during the calendar year totaling $600 or more to any payee for a service.  The most common types of payments reflected on this form are health and medical services (including veterinarians), payments to non-employees, accounting fees, and attorneys’ fees.  This form is only required to be sent to non-corporations, with the exception of attorneys, who should receive the form for all payments made to the attorney for services.

1099-MISC, Miscellaneous Information

This form is unchanged for 2023.  It reflects payments made during the calendar year totaling $600 ($10 in the case of royalties) or more.  The most common types of payments to be reflected on this form are rents, royalties, medical and healthcare payments (including veterinarians), and gross proceeds to attorneys.  Payments for medical and healthcare and gross proceeds to attorneys are reported even if the entity is a corporation.

1099-R

This form reflects distributions from pensions, annuities, IRAs, etc.  Distributions made to individuals and those made directly to IRAs or other qualified plans must be reported.

1099-DIV

All dividends of $10 or more are reported on this form.  Only those dividends paid out of accumulated earnings and profits should be reported for distributions from S corporations.

1099-INT

Interest payments of $10 or more are reported on this form.  Interest payments to corporations are not required to be reported.

Due Dates

Keep in mind that the 1099s must be submitted to the recipient by January 31, 2024.  Generally, Form 1096, accompanied by the Form 1099, must be submitted to the Department of the Treasury by February 28, 2024.  However, Form 1099-NEC and Form 1096 are due to the IRS by January 31, 2024.

Electronic Filing – Federal

If your company is filing more than 10 forms of any type, all such forms are required to be filed electronically.  This number has changed since the IRS has updated the provided procedures.  This is the first year of the reduction in the number of forms from 250 to 10 for the electronic filing requirement.

Electronic Filing – New Jersey

New Jersey has mandated electronic filing of Forms 1099.  If you use a payroll service to prepare your 1099s, we suggest you confirm with them that they will be filing them electronically on your behalf.

If you file these forms directly, you can do it using either:

1. The NJ site used to file the other NJ Forms (927, WR-30).There is a separate section for the W-3 filing. Once you select that, there will be an additional selection for completing the W-2 electronic filing.
2. The NJ secure electronic bulk filing service using Axway. You can get additional information using this method under “Informational Returns.”

For further information, please contact Sax advisor Alan S. Isaacs, CPA, MBA, at [email protected]