Deadlines are fast approaching, make sure you are prepared for the tax season. There can be major tax penalties for missing these deadlines. But don’t wait until last minute, make sure you have every vendor, independent contractor, service provider, freelancer complete a W-9 before the start of service. Later on, the vendor is less likely to complete a W-9 to avoid paying tax and you’ll have to report an incomplete 1099 which can lead to penalties. Products, supplies or materials sold usually do not require 1099s, the sales tax typically charged when sold covers the tax already. The 1099-K is issued for reported payments settled, most common with electronic payment sites such as credit cards, Square, eBay, PayPal, etc. but this does not reflect net profit or loss and entering this in can lead to double entries of revenues. The W-9 is a simple form to complete with basic fields such as; recipient name or business name, taxpayer’s identification number, or social security number, address and type of business.

What many taxpayers don’t seem to understand is the severity of penalties for missing or filing the 1099 form late. When you file a tax return, the IRS form will ask under perjury whether or not you filed the necessary 1099 forms.

If you made any payments to a vendor, independent contractor, service provider, freelancer or whatever title you choose for a service provider you paid over $600 to, there is a high probability that you must 1099-NEC this person. There are some exceptions but we’ll discuss those here. The IRS also has more recently moved the due date of the most commonly filed 1099-NEC (formerly 1099-MISC) to January 31st.