Everybody heard about Form 1099, but most of my clients ask for my professional opinion as a CPA to tell them if they have to issue 1099’s at the beginning of the year. If you use independent contractors to perform services for your business or rental and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses. The 1099s for 2013 must be provided to the independent contractor no later than January 31st of 2014.
It is not uncommon to have a repairman out early in the year, pay him less than $600, then use his services again later and have the total for the year be $600 or more. As a result, you overlook getting the information needed to file the 1099s for the year.
Therefore, it is good practice to always have individuals who are not incorporated complete and sign the IRS Form W-9 the first time you use their services. Having a properly completed and signed Form W-9 for all independent contractors and service providers eliminates any oversights and protects you against IRS penalties and conflicts.
IRS Form (W-9, Request for Taxpayer Identification Number and Certification) is provided by the government as a means for you to obtain the data required to file the 1099s from your vendors. It also provides you with verification that you complied with the law should the vendor provide you with incorrect information.
We highly recommend that you have a potential vendor complete the Form W-9 prior to engaging in business with them. The form can either be printed out or filled onscreen and then printed out. The W-9 is for your use only and is not submitted to the IRS.
In order to avoid a penalty, copies of the 1099s need to be sent to the IRS by the last day of February. TaxCutters, the tax preparers of Chicago prepares 1099s for submission to the IRS with the 1096 submittal form.
Please attempt to have the information to our office AS SOON AS POSSIBLE so that the 1099s can be provided to the service providers by the January 31st due date. Call us, Tax Accountant Chicago if you have any questions on 773-728-1500 right now!!