Penalties for Not Filing a 1099 Form
Filing your own taxes can be an overwhelming process. There are lots of forms and they all need to be filled out with great care. One form that has recently received much attention is the 1099-MISC form. The penalties have been changed and this can have a big impact on those who file improperly. To make sure you don't end up paying big bucks this tax season, here are the penalties you should know about. Recently, congress has increased the penalties for late filing or failure to file form 1099-MISC. These penalties became effective on January 1, 2017 and they basically doubled. It is known as The Trade Preferences Extension Act of 2015.
What is the Penalty for Not Issuing Form 1099?
If you don’t issue a Form 1099 when you were supposed to, and then correct it, there are a few tiers of penalties depending on how late you are.
- If you submit the missing form within 30 days of the due date, You will pay $50 per form and the cap is increased to $ 532,000.
- If your corrections are made after 30 days and before August 1st, you will be charged $100 per form and the cap is increased to $1.5 billion.
- If you corrections made after August 1st are charged $250 per failure up to $3 million.
What is the Penalty if I Don’t Issue a 1099 on Purpose?
Should a company intentionally disregard issuing the form, they can be subject to a penalty of $500 per statement. This is up from the previous penalty of $250.
What is the Penalty for Not Reporting 1099 Form?
You may be subject to a penalty if you fail to report miscellaneous income that was received on a Form 1099-MISC. Should you fail to report any miscellaneous income, your return may understate tax liability on your part. If this happens to you, if the IRS can impose an accuracy-related penalty that equates to 20% of the underpayment. For example, if you failed to include any miscellaneous income causing you to understate tax liability by $1000, the penalty could be $200 ($500 x .20 = $200).
Getting a penalty from the IRS can be bad, and even worse if you have multiple forms receiving penalties. While these penalties are shocking to some, the good news is that they are relatively easy to avoid. Make tax season easier by register and e-filing with us today. We’ll help you e-file your taxes and make sure you are avoiding any unnecessary penalties.