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Jean   Murray

5 Common 1099-MISC Errors - And How to Avoid Them

By January 21, 2013

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Before you send out 1099-MISC forms to contractors and individuals who have done work for you, be sure you review this article. Remember, 1099-MISC forms are due January 31, 2013, for payments you made in 2012 to any outside service to whom you paid more than $600 in 2012. You don't have to send the form to a corporation, unless the corporation is a law firm. Got that? Confusing, I know.

1. Sending out a 1099-MISC to someone who is really an employee. Employees receive Form W-2, but someone who is not an employee must receive Form 1099-MISC. If you aren't sure whether a worker is an employee or not, you should check with your employment attorney. Read more about the criteria for employees vs. independent contractors.

2. Not using the approved form. Copy A of the approved IRS 1099-MISC form is printed in a special red ink. You can't just copy the form and print it out on your computer. You can get 1099-MISC forms from the IRS, from your local office supply store, or you may be able to file electronically.

3. Using the form for the wrong year. You are reporting payments you made in 2012, so you must use the 2012 1099-MISC form.

4. Failing to send a form to a contract worker or service. You must send Form 1099-MISC to anyone you paid more than $600 in 2012. The only exception is that you don't have to send this form to a corporation; if the corporation is a law firm, you do have to send out a 1099-MISC. When in doubt, send it out. You can read more about who gets a 1099-MISC form on the 1099-MISC instructions.

5. Failing to file 1099s with the IRS. After you submit forms to payees by January 31, you must then file these forms with the IRS by February 28, 2013, along with a transmittal form 1096. You must use a different 1096 for each type of 1099.

5. Failing to check for errors and omissions. You can incur penalties for leaving out information and including incorrect information.

  • Does the information on the 1099-MISC match the information on the payee's W-9 form?
  • Are entries readable, in black ink or computer generated?
  • Do entries fit in the boxes? The IRS suggests you use 12 point Courier font.

Be sure everything is complete and correct; double check.

Read more about Form 1099-MISC: All the Facts

Read more about How to Prepare and Distribute Form 1099-MISC

 

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