Common Errors in Form 1099-MISC and other 1099 Forms

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Common Errors in Completing Form 1099-MISC

Being forewarned is forearmed. After you prepare Form 1099- MISC forms and send these forms to individuals and businesses your business has paid and file these forms with the IRS, review these common errors to avoid problems.

What is Form 1099-MISC? 

Form 1099-MISC - Miscellaneous Income, must be sent to anyone (not including employees) to whom you paid $600 or more in a calendar year.

The forms must be provided to payees no later than January 31 of the following year and then filed with the IRS, along with a transmittal form 1096, no later than February 28. So, for 2014 payments, you must give Form 1099-MISC to payees by February 2, 2015 and submit to the IRS by February 28, 2015.

Who Must Receive a Form 1099-MISC  

Any individual who is not an employee and any business that is not a corporation (that includes partnerships and LLC's) to whom you paid $600 or more in a calendar year, including all contractors and all attorneys, except:

  • Corporations (but law firms that are corporations must receive a 1099-MISC)
  • Wages paid to employees There are many exceptions to this requirement; check with your CPA or tax advisor about who must receive Form 1099-MISC.

Read more about who must receive Form 1099-MISC.

Common Errors in Completing and Submitting Form 1099-MISC:

Using the form for the wrong year.

Use the 1099-MISC form for the year the payments were made, not the year you are completing the form.

For example, for payments made in 2014, use the 2014 1099-MISC form, even though you are completing the form in 2015.

Not using the approved form.

You cannot download the 1099-MISC form, copy and use it. The red on Copy A (the copy that is sent to the IRS) is a special ink that can't be duplicated with a color copier.

You must get the approved forms, from an office supply company, the IRS, or from a software company.

Sending a 1099-MISC form to an employee.

Employees must receive Form W-2 for wages or salaries paid to them in the course of their employment. If the person is paid for outside contract work for your business, those payments may be made with a 1099-MISC form. It's complicated; check with your tax advisor for questions about who should receive Form 1099-MISC and read more about employees vs. independent contractors..

Leaving out payee tax ID numbers. 

Anyone to whom you are providing Form 1099-MISC must have a taxpayer ID on file with you. You must first request a taxpayer ID from each payee on . Form W-9. If no taxpayer ID is provided, the taxpayer is subject to back-up withholding.

Failing to Include a Transmittal Form

When you file all of the 1099-MISC forms with the IRS, you must include all forms for your company and a transmittal form 1096 which summarizes all the numeric information on all the 1099-MISC forms.

A separate 1096 must be included for each different type of 1099 form filed by your company. Here is more information on how to submit transmittal form 1096.If you e-file Form 1099-MISC forms, you don't have to include Form 1096, and the deadline is extended.

 

Making Form errors:

Using financial software can help you avoid many of these errors on W-2 forms, especially form errors, and your software can warn you when you are reaching the Social Security maximum wage amount. Check out this article on 2012 accounting software programs by Rosemary Peavler, Guide to Business Finance, focusing on programs that include payroll functions.

More about Form 1099-MISC: All the Facts, including how and where to file with the IRS.

The IRS has a specific web page dedicated to Information about Form 1099-MISC

  • Failing to include decimal and cents on amounts
  • Failing to use black ink (making entries too light)
  • Making entries too large or too small. The IRS suggests you use 12 pt. Courier type font for printing 1099-MISC forms.
  • Mis-formatting employee name. Employee first name and middle initial goes in the first box, the employee surname goes in the second box, and any suffix (like "Jr.") goes in the third box.

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