Now that the holiday season and the last lingering statements are officially in the books, it is time to review and report key information from the previous year. Many business owners know to look at profits and losses for the last year and begin financial planning for the year ahead. In addition to reviewing these reports though, business owners also need to do a deep dive into their contractors and certain payments made during the last year.
Many business owners will need to review items such as non-employee compensation and rent payments made during the previous year before the end of January in order to meet 1099 reporting deadlines. A 1099 tax form is used to report miscellaneous income earned from sources other than an employer. For business owners, who are the employers, this often means payments made to non-employees. There are many different types of 1099 forms, each one related to a different type of income/expense.
By understanding the requirements for issuing 1099s and the common types of 1099s, business owners can file these tax forms on time and with confidence.
1099 Deadlines
The most important requirement to keep in mind when issuing 1099s are the deadlines that the IRS sets for when these statements are required to be delivered to their recipients and when then required to be filed with the IRS.
According to the IRS, “1099 statements must be furnished to the payee by January 31 and filed with the IRS by February 28 of the following year.”1
In other words, the expenses paid in 2024 must have a 1099 form generated and mailed or given to the recipients by January 31, 2025. After payees are given a copy of the 1099s, then a business needs to file them by mail to the IRS no later than February 28, 2025 or electronically no later than March 31, 2025.
Common Types of 1099s for Businesses
1099-NEC
A 1099-NEC form reflects the payments made to non-employees throughout the year. This is required to be generated for any person or independent contractor who receives at least $600 in nonemployment income during a calendar year. This includes anyone who is not an employee of the business, self-employed individuals, LLCs that do not file as a corporation, and freelancers.
1099-MISC
A 1099-MISC form reflects the miscellaneous payments that are paid to people throughout the year. 1099-MISC forms are common for business owners, as many payments and expenses fall under this category.
1099-MISC forms must be generated and filed if, during the past year, a business has paid:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- At least $600 in
- Rents
- Prizes and Awards
- Cash Paid from a Notational Principal Contract to an Individual, Partnership, or Estate.
- Other Income Payments
- Fishing Boat Proceeds
- Medical and Health Care Payments
- Crop Insurance Proceeds
- Gross Proceeds Paid to an Attorney
- Section 409A Deferrals
- Nonqualified Deferred Compensation2
Additional Types of 1099s
Use the table below to review other types of 1099s that may need to be issued.
| 1099 Type | Purpose |
|---|---|
| 1099-A | Reports the acquisition or abandonments of foreclosure property. |
| 1099-B | Reports proceeds from broker and barter exchange transactions. |
| 1099-C | Reports the cancellation of debt. |
| 1099-CAP | Reports changes in corporate control and capital structure, including shareholders who financially benefit from such structural changes or acquisitions. |
| 1099-DIV | Reports interest income, dividends, tax refunds, or unemployment benefits paid out by banks or other financial institutions. |
| 1099-G | Reports certain government payments. |
| 1099-H | Reports payments made in advance to help offset qualifying health insurance expenses. |
| 1099-INT | Reports interest earned from checking, savings, or other banking accounts. |
| 1099-K | Reports digital payments and withdrawals through credit cards and third-party payment processors. |
| 1099-LS | Reports interest earned in a life insurance contract. |
| 1099-LTC | Reports long-term care and accelerated death benefits. |
| 1099-OID | Reports originally issue discounts (for purchases of bonds at less than their face value). |
| 1099-PATR | Reports taxable distributions received from cooperatives. |
| 1099-Q | Reports payments from qualified education programs, such as distributions from 529s or Coverdell Educational Savings Accounts. |
| 1099-QA | Reports distributions from Achieving a Better Life Experience (ABLE) accounts. |
| 1099-R | Reports distributions from retirement accounts or IRAs. |
| 1099-S | Reports proceeds from real estate transactions. |
| 1099-SA | Reports funds dispersed from a HSA or medical savings accounts. |
| 1099-SB | Reports the sale of a life insurance policy. |
How to File 1099s
1099 forms can be purchased at most home office stores or using online software. The IRS also provides fillable PDF copies for free on their website. Use the link below to view and access copies of 1099-NEC and 1099-MISC forms.
Business owners can file 1099 and other information returns electronically with the IRS using the Filing Information Returns Electronically (FIRE) system. For businesses filing more than 10 information returns, these returns are required to be filed electronically. For more information about how to use FIRE and to log-in and file forms, please visit the link below.
- Internal Revenue Service. (2023, Dec 14). Instructions for Forms 1099-MISC and 1099-NEC. https://www.irs.gov/instructions/i1099mec#en_US_202401_publink100019913 ↩︎
- Internal Revenue Service. (2023, Dec 14). Instructions for Forms 1099-MISC and 1099-NEC. https://www.irs.gov/instructions/i1099mec#en_US_202401_publink100019913 ↩︎
