What Do I Need To Know About 1099-NECs?

Small Business Tax Savings Podcast

10/05/22 • 16 min

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With January fast approaching, it’s important for business owners to start preparing their 1099-NECs. If you want to stay ahead and get everything in order before the deadline, this episode is for you! We discuss whether or not a transaction needs a 1099, what the process for filing is, and what will happen if you missed filing a 1099.

[01:07] Fast Facts About 1099-NECs

If your business pays a subcontractor or vendor, whether it’s an individual or a company, a total of $600+, you need to request a W9 so you can send them a 1099-NEC
If you received a 1099-NEC as a contractor, you must report this income to the IRS
Be it one-time or accumulative, as long as the total payment is over $600, you need to file a 1099-NEC

[04:05] When It Is NOT Required to File 1099-NECs

Payments to C or S Corporations
Employees
Payments for merchandise, telephone, freight, or storage
Payments to non-U.S. citizens performing work outside of the U.S
Payments made via Credit Card or PayPal

[06:25] 1099-NEC Preparation Made Easy

Step 1 – Collect a W9 from all contractors before you pay
Step 2 – Fill out the 1099-NEC
Step 3 – Send a copy of the 1099-NEC form to the contractor
Step 4 – File a copy of the 1099-NEC with the IRS and State (if required)
For contractors who are non-U.S. citizens - get an accomplished W8-BEN or W8-BEN-E instead

[08:54] Penalties for Failing to File a 1099-NEC

1099-NECs must be filed at the IRS and sent to the recipient by January 31st of the following year
The fine will depend on how late you are

[10:16] Different Types of 1099s

There are over 15 types of 1099 forms that are used for various purposes

[12:30] Final Thoughts

Do that legwork now so you can get on top of the forms needed
Utilize software to make processing and filing easier

Key Quotes

“If you are the one paying the contractor, you are the one that files the 1099-NEC.” - Mike Jesowshek

“Sometimes it's hard to get a W9 from someone after the fact so just ask for it upfront. Again, one rule of thumb before you pay anyone, collect a W9 from them.” - Mike Jesowshek

Resources Mentioned

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax

IncSight Packages: https://incsight.net/pricing/

Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale

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Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

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To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a

10/05/22 • 16 min

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