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Updated 1099 Deadlines, Penalties & State Filing Requirements For Business Owners

Easily file 1099 forms to the IRS before the due date with compliance, tips, and useful resources.

As 2020 comes to a close, business taxpayers are preparing for the 2021 tax season starting with the New Year. With due dates for 1099 forms moved forward, small and large businesses alike are anticipating the tax season.

With the re-introduction of Form 1099-NEC, many businesses are figuring out how to compartmentalize their taxes according to the IRS guidelines.

When it comes to informational filings, business taxpayers often rely on tax experts and accounting professionals who navigate them through tax filings.

As tax experts, we understand tax season can be challenging, especially with the Covid-19 pandemic. We’re here to help business owners understand important aspects of 1099 filings.

Here are key points to keep in mind when filing your tax forms in January 2021.

State-Wise 1099 Filing Requirements

Each state has different filing requirements. For example, if your business operates in New York and earns income there, you must file according to New York State Tax Department’s guidelines.

If your principal business is in New York but you earn income from another state, such as California, you must check compliance with both states.

While small businesses operating in one location need not worry, medium and large companies working in multiple states should consult state tax departments for compliance.

Note that the new Form 1099-NEC is not part of the IRS 1099 Combined Federal/State Filing Program (CF/SF). Although its parent form, 1099-MISC, remains in the program, businesses must follow up with state tax authorities regarding Form 1099-NEC filing guidelines.

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1099 Deadlines

Previously, paper and e-file deadlines were nearly a month apart. However, according to the PATH Act (P.L. 114-113, Div. Q, sec. 201), all 1099 forms’ due dates were accelerated from February 28th to February 1st.

All 1099 forms must be filed to the IRS (paper or electronic) by February 1st, 2021.

With confusion caused by differing deadlines and Form W-2 filings happening earlier, the IRS abolished the automatic 30-day extension for all 1099 forms to streamline the process.

The 1099 form series now includes Form 1099-NEC, which dates back to 1979 and deals exclusively with nonemployee compensations.

This change is appreciated by many tax experts and businesses as it aims to curb corrupt tax practices such as widespread employee misclassification in certain industries.