1099s are a form almost everyone’s familiar with but don’t necessarily know everything about.
While most of us may have dealt with a 1099-MISC for gig work or other independent contracting, there’s a slew of other types of there as well. These are one of the more important families of forms that the IRS offers, and one that can help clarify quite a bit for your business tax-wise.
However, for how ubiquitous they are, there’s also a fair amount of complications that come with them too, which the IRS can be quite strict about. That’s why we put together a few reasons why you should consider having an accountant possibly take over the reins of your 1099s this year. Check them out below:
Who do 1099s go to?
1099s are a lump-sum of different transactions you might have to file with the IRS. The most common 1099 is the 1099-MISC, which is generally used for non-employees such as independent contractors. As noted by Balance SMB, some other forms include:
- $10 or more on royalties paid.
- Direct sales of $5,000 or more.
- Payments for rental property expenses.
- Medical-related payments (including physicians, physician corporations, or other suppliers of health and medical services/supplies
- Fish purchases paid in cash for resale.
- Crop insurance proceeds.
- Gross proceeds paid to attorneys.
As you can see, there are a fair amount of routes beyond the 1099-MISC that 10999s can go. Considering we’re just breaking the iceberg on what 1099s are, let’s dive into the types that could potentially apply to your firm.
There are several different types that could apply to your firm.
Although the 1099-MISC is the most common type of 1099 you’ll most likely use, the purpose of the 1099 stretches beyond just what’s above. In fact, the IRS has over 20. To give you a taste, here are the first few NOLO lists out:
- 1099-A, Acquisition or Abandonment of Secured Property
- 1099-B, Proceeds From Broker and Barter Exchange Transactions
- 1099-C, Cancellation of Debt
- 1099-CAP, Changes in Corporate Control and Capital Structure
- 1099-DIV, Dividends and Distributions
- 1099-G, Certain Government Payments
- 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments
- 1099-INT, Interest Income
- 1099-K, Merchant Card and Third-Party Network Payments
- 1099-LTC, Long-Term Care and Accelerated Death Benefits
As you can see, 1099’s cover a whole swath of issues, which is why it’s best to consult with a tax expert on which routes you might need to include in your mix.
The deadlines are different.
The deadlines for 1099s are usually January 31st. Extensions are available through Form 8809, which can help if you still need to round up and rectify what’s happening with your contractors.