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

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

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

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

When it comes to informational filings, business taxpayers usually look to tax experts, accounting professionals, and other authoritative professionals who can navigate them through tax filings.

As tax experts, we understand that tax season can be hard as it is and the Covid-19 global pandemic is not making things any easier. So, we are here to do our bit to help business owners thoroughly understand certain things related to 1099 filings. 

So, here are a few things that you need to be mindful of when filing your tax forms in January 2021.

State-Wise 1099 Filing Requirements

Each state has different filing requirements. For example, if you are operating a business in New York, and earn your income from New York, then you have to file your tax forms according to the New York State Tax Department’s guidelines. 

Now, if your principal (headquartered) business is located in New York but you are earning income from another state, say California, then you must check with both the states in order to file with compliance. 

While small businesses that are operating in just one location do not have to worry about this, medium and large companies that are operating in more than one state must consult their respective state tax departments to comply with their guidelines. 

It is also important to note that the new form 1099-NEC is not a part of the IRS 1099 Combined Federal/State Filing Program (CF/SF). Even though its parent form, 1099-MISC, is still a part of the program, 1099-NEC is not included here. This means that businesses or their vendors have to follow up with the respective state tax authorities to get the guidelines to file Form 1099-NEC.

Useful Links 

• Check State-Wise Filing Requirements For 1099 Forms 
• Check State-Wise Filing Requirements For Form 1099-NEC
• Box-Wise Guide To Form 1099-MISC
• Box-Wise Guide To Form 1099-NEC

1099 Deadlines  

Previously, business taxpayers had the luxury of time with paper files and e-files being on different dates, almost a month apart from one another. However, according to the PATH Act, P.L. 114-113, Div. Q, sec. 201, the due dates for all 1099 forms have been accelerated and brought forward from the 28^th of February to the 1^st of February. 

This means that all 1099 forms have to be filed to the IRS (paper or electronic) on or by one common due date – 1^st of February 2021.

Since the wide gap between paper files and e-files caused a lot of confusion, and with Form W-2 being filed, taxed on, and returned even before 1099-MISC forms were filed, the IRS decided to abolish the automatic 30-day extension for all 1099 forms to further streamline the process. 

1099 form series now includes Form 1099-NEC; a resurrected form that dates back to 1979 exclusively deals with nonemployee compensations. 

On a positive note, this move is appreciated by many tax experts and businesses (1, 2, 3) as it intends to curb corrupt tax practices, such as widespread employee misclassification in certain industries.