Payroll and Taxes

Penalties for Missing 1099 Filing Deadlines

Lynn Brown
March 4, 2024
min read

Before we explore the penalties, let's understand the basics. The IRS requires that businesses file Form 1099-NEC by January 31 (or the next business day if it falls on a weekend or holiday). This form reports payments of $600 or more made to nonemployees for services rendered in the previous tax year.

Similarly, Form 1099-MISC, used for various payments, including rent and medical expenses, must be filed by March 1 (for paper filing) or March 31 (for electronic filing). Missing these deadlines can cause consequences that we'll uncover next.

Penalties for Late 1099 Forms

The penalties for failing to issue a Form 1099-NEC or Form 1099-MISC by the deadline range from $60 to $310 per form. The severity of the penalty depends on how long past the deadline the form is issued. 

If a business intentionally neglects the requirement to provide a correct payee statement, it incurs a minimum penalty of $630 per form in 2023 or 10% of the income reported on the form, without a maximum limit.

Penalties for Late 1099 Forms

Filing Deadlines and Changes in Forms

Understanding the filing deadlines is crucial. Starting with the 2020 tax year, Form 1099-MISC must be filed by March 1 (paper) or March 31 (electronic), while Form 1099-NEC has an earlier deadline of January 31.

Additionally, changes have been made to Form 1099-MISC. Box 7, previously used for reporting nonemployee compensation, has been replaced, and the form now includes a checkbox to indicate $5,000 or more paid for direct sales.

Reporting 1099 Income and Avoiding Penalties

If you receive a Form 1099-MISC or Form 1099-NEC, ensure you report this miscellaneous income on your tax return. Failure to do so may lead to penalties. The IRS can impose an accuracy-related penalty equal to 20% of your underpayment if your return understates tax liability.

Tips for Smooth 1099 Filing

To streamline the 1099 filing process and minimize errors, consider the following tips:

  • Maintain organized payroll throughout the year for accurate records.
  • Request updated Form W-9 annually from contractors during onboarding.
  • Ensure you have accurate information ready when filling out 1099 forms.
  • By staying informed and adhering to filing deadlines, you can navigate the complexities of 1099 reporting successfully. Remember, compliance is not just about avoiding penalties; it's a crucial aspect of responsible business operations.

Simplify your form-filing process and avoid potential penalties with The latter automates the generation of essential forms such as 1099 and W-2, ensuring accuracy and compliance. 

No more manual calculations. With a user-friendly interface, dedicated customer support, and accurate filings, is your partner in efficient payroll management.

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