IMPORTANT – 2024 Federal Form 1099 reporting

General Form 1099 reporting requirements

Certain types of payments made during the year by your business/organization may require tax information reporting on a Form 1099.  These can include interest, dividend and rent payments and, most often include payments for services made to nonemployees or independent contractors during the ordinary course of your business. You are required to report these payments on the IRS Forms 1099-INT, 1099-DIV, 1099-MISC & 1099-NEC if payments are made to non-incorporated entities for services.  

Electronic filing requirements

In the prior year, the IRS instituted an electronic filing mandate. If you file a combined 10 or more information returns (which include 1099s and W-2s), you are required to file them electronically. See Herbein’s “Filing Requirements Reminder for W-2s and 1099s” blog here .  

When to use Form 1099-MISC

The Form 1099-MISC (Miscellaneous Income) is used for payments to individuals, estates, limited liability companies (unless treated as a C or S corporation), partnerships, and attorneys regardless of filing status if one of the following payments was made during the year:

• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
• $600 or more in rents, prizes and awards, other income payment, medical and health care payments, and gross proceeds paid to an attorney.
• Direct sales of at least $5,000 of consumer products to a buyer on a buy-sell, a deposit-commission, or other commission basis for resale. (This can be reported on either the 1099-MISC or 1099-NEC.)
• Any person for which you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

If a payment was made to a corporation (including a limited liability company that is treated as a C or S corporation), a Form 1099-NEC is not required. Obtaining a W-9 for each vendor to which a payment was made during the year will assist you in making this determination.

The 1099-MISC is due to the recipients by January 31, 2025, and is due to the IRS by March 31, 2025, if filing electronically. (If you are filing with paper, the forms are due by February 28, 2025. Please note that the IRS is encouraging electronic filing regardless of the number of forms filed.) 

When to use Form 1099-NEC

A 1099-NEC is used to report at least $600 to:

• Services performed by someone who is not your employee.
• Payments to an attorney (including corporations).
• Direct sales of at least $5,000 of consumer products to a buyer on a buy-sell, a deposit-commission, or other commission basis for resale.  (This can be reported on either the 1099-NEC or 1099-MISC.)
• Any person for which you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

The 1099-NEC is due to the recipient and the IRS by January 31, 2025.

To avoid a penalty that can be imposed for failure to file a timely informational return with the IRS, the original forms must be furnished to recipients and filed with the IRS by the required due date. Also, be sure to file 10 or more returns electronically to avoid additional penalties.

Final notes regarding Form 1099 reporting

While this tax blog addressed federal Form 1099 reporting requirements, it is important to also consider and be aware of the various state filing requirements. We recommend that you visit your respective state Department of Revenue website or contact our office for information.

Please note, you are ultimately responsible for meeting the IRS and state requirements for filing 1099s. By providing the information and instructions in these 1099 reporting tax blog articles, our objective is to assist you in navigating these reporting requirements, while minimizing cost of compliance by avoiding unnecessary time spent in the preparation of your 1099s. If you wish to further reduce your compliance cost and want to prepare and file your own 1099s, we would be happy to assist with that as well. If you have any questions, please feel free to contact your Herbein team member.

Article Contributed by Michelle Sowers