Rules and regulations for filing 1099 returns get revised every new year and it’s quite important for every individuals, corporate, organizations, and institution who are liable to pay the taxes to be aware of these changes. Below listed are a few changes that are going to be implemented in this new year i.e. 2019 on wards that involves 1099-MISC and 1099-K.
New Rules for Filing 1099-MISC and 1099-K Forms
Beginning January 2019, the IRS will implement its new rules and regulations relating to the submission of 1099-MISC with the Box 7 as well as those without having any Box 7 after the deadline of January 31, 2019. While submitting, you will need to be careful and should keep in mind the changes that they have made recently. If not submitted properly, companies will start receiving penalty notices for not submitting the non-Box 7 1099-MISC forms. These new regulations and rules will apply to paper and electronic filing services.
What this basically means is after the 31st of January 2019, 1099 MISC with Box 7 completed should be filed along with the 1099-MISC with another Box separately. For example, on 5th February, if you have a 1099-MISC with Box 7 and 1099-MISC with only one Box 1 completed should be filed separately.
It is very much important for everyone to know that your e-file provider should follow the appropriate IRS transmitting rules that actually separates the 1099-MISC post 31st December 2018 in order to protect the companies from getting the erroneous section 6721 penalties who did not file with Box 7. If companies submit the non-Box 7 1099-MISC with the late Box 7 forms by mistake and get a notice 972CG, definitely a penalty will be issued for your information returns, as per the IRS they may respond and then clarify what exactly happened during the content of submission, proposing the number of Forms 1099-MISC which was not reported.
Changes in the Requirement for Submitting 1099-K State
Certain states are required to submit 1099-Ks that have an amount of more than $600 in Box1a Gross, which is quite less than the $20,000 minimum eligibility for the federal reporting. The IRS doesn’t presently require organizations to submit the 1099-Ks unless the amount for the entire year to file the Box1a is minimum $20,000. However, the individual states are aware now too the income reporting possibilities and have started mandating to submit 1099-K form for any gross payments that are more $600. It is the same threshold for reporting the 1099-MISC Box 7 too.
For numerous reasons, most of the companies prefer not to submit to the IRS with the 1099-Ks which don’t meet the requirement i.e. $20,000. This doesn’t remove their need to submit to their respective state with the 1099-Ks which are more than the threshold i.e. $600, but less than the $20,000. For any further information, you can go through the IRS official and get updated with the recent changes that are going to take place starting January.