1099 Deadline is Jan 31st - How to Issue 1099’s to Your Vendors
If you paid a vendor or Independent Contractor $600 or more in 2021 for services rendered or certain miscellaneous payments, the IRS requires you to issue them a 1099. The deadline to do this is January 31st, and I’ve got a tip to make the filing process simple and cheap!
Just yesterday, a client of mine said his tax preparer charges a minimum of $300 to issue up to five 1099’s on his behalf. My client only needed one 1099 issued, so I shared a site that I use, eFileMagic, where you can issue 1099’s for less than $4 each (when filed electronically, which I recommend). He did it himself and saved $296!
Check out my 3-minute video explaining the process of how this all fits together, and see below:
WHAT: IRS Form 1099-NEC (non-employee compensation) and 1099-MISC (other types of miscellaneous income) are forms that you SEND to vendors or Independent Contractors that work FOR YOU (if you are self-employed, you may also RECEIVE these forms from your customers showing what they paid you).
HOW: For eligible vendors paid $600 or more in 2021, you need their name, address, tax ID number (may be the same as their social security number) and email address for e-filing. You should request that they fill out a form W-9 if you do not already have this information. Keep the W-9 on file (securely - don’t put their info on blast!). Do not send it to the IRS. Report the entire amount you paid them on the 1099 (most will use the 1099- NEC).
WHEN: Use a system such as eFileMagic to report the 1099 electronically by January 31st. Your vendor and the IRS will get a copy at the same time.
If you use QuickBooks Online and have properly tracked payments you made to each vendor, this information can easily be imported into eFileMagic. Or, you can always upload an excel sheet or enter the information manually.
FYI, QuickBooks Online does have a 1099 process built in, but the cost is about the same, and, to be honest, the process is cumbersome and confusing. That’s why I am sharing this tip! I’ve tested the tools and only bring you the ones that really work!