March 31st Deadline for Some 1099s, Usually You Should File Early, Albeit Sometimes it’s Better to Wait

As a busi­ness own­er, fil­ing tax­es can be a tedious task. It’s one of those things that no one likes to do, but it’s nec­es­sary. When it comes to fil­ing 1099s, the process can be even more stress­ful. You need to make sure that you have all of the nec­es­sary infor­ma­tion from your con­trac­tors, includ­ing their names, address­es, and tax iden­ti­fi­ca­tion num­bers, and then you need to get those forms filed on time. But what if we told you that delay­ing the fil­ing of your 1099s until March 31st could actu­al­ly ben­e­fit your busi­ness? In this arti­cle, we’ll explore why wait­ing until the last minute can be ben­e­fi­cial, and pro­vide you with some tips and tricks for stream­lin­ing the process.

What is a 1099 form?
Before we dive into the due date for 1099 forms due on March 31st, let’s briefly dis­cuss what a 1099 form is and who needs to file one. A 1099 form is used to report income earned from sources oth­er than wages. This includes income earned from self-employ­ment, free­lance work, inter­est, div­i­dends, and oth­er sources.

As a busi­ness that has self-employed indi­vid­u­als or free­lancers, you may be famil­iar with the 1099 form in its lat­est iter­a­tion, the 1099-NEC, which is used to report income earned from sources oth­er than wages.
If you are required to file a 1099 form, it is impor­tant to know the dead­line for sub­mit­ting it to the IRS. In most cas­es, the dead­line for fil­ing a 1099-NEC form is Jan­u­ary 31st.

How­ev­er, there are dif­fer­ent due dates for some types of 1099 forms.

If you are a free­lancer or self-employed indi­vid­ual who received pay­ments of $600 or more from a sin­gle client or com­pa­ny dur­ing the tax year, you are required to file a 1099 form. Addi­tion­al­ly, if you received rental income, invest­ment income, or oth­er types of income that are not report­ed on a W‑2 form, you may also be required to file one of the oth­er 1099 forms.

There are sev­er­al types of 1099 forms, each used to report dif­fer­ent types of income. Some com­mon types of 1099 forms include:

• 1099-MISC: This form is used to report income earned from self-employ­ment, free­lance work, and oth­er types of non-employ­ee com­pen­sa­tion.
• 1099-INT: This form is used to report inter­est income received from a bank or oth­er finan­cial insti­tu­tion.
• 1099-DIV: This form is used to report div­i­dend income received from stocks and oth­er invest­ments.
• 1099‑R: This form is used to report dis­tri­b­u­tions from retire­ment accounts.

Now that we have a basic under­stand­ing of what a 1099 form is and who needs to file one, let’s dis­cuss the due date for 1099 forms due on March 31st.

Due date for 1099 forms due on March 31st
While most types of 1099 forms are due on Jan­u­ary 31st, there are some impor­tant excep­tions.

If you are required to file a 1099 form for pay­ments made to an inde­pen­dent con­trac­tor or free­lancer, the due date is typ­i­cal­ly Jan­u­ary 31st.

Specif­i­cal­ly, the due date for fil­ing Form 1099-NEC (Non­em­ploy­ee Com­pen­sa­tion) with the IRS is Jan­u­ary 31st. This form is used to report pay­ments of $600 or more made to inde­pen­dent con­trac­tors, free­lancers, and oth­er non-employ­ees for ser­vices ren­dered. How­ev­er, if you made pay­ments to an inde­pen­dent con­trac­tor or free­lancer for work or ser­vices per­formed out­side of the Unit­ed States, the due date is March 31st.

Why Wait­ing Until March 31st Can Be Ben­e­fi­cial (or at least not the worst idea in the world)
The dead­line for fil­ing 1099s is typ­i­cal­ly Jan­u­ary 31st, so why would wait­ing until March 31st be ben­e­fi­cial? The answer is sim­ple: it gives you more time to col­lect and ver­i­fy all of your infor­ma­tion. When you file ear­ly, you run the risk of miss­ing out on crit­i­cal infor­ma­tion that could impact your fil­ings. For exam­ple, if you receive a cor­rect­ed W‑9 from a con­trac­tor after you’ve already filed your 1099s, you’ll need to file an amend­ed return. This can be time-con­sum­ing and could poten­tial­ly result in penal­ties or fees.

By wait­ing until the end of March, you give your­self extra time to col­lect and ver­i­fy all of your infor­ma­tion. You’ll have a bet­ter idea of who should receive a 1099 and who should­n’t, which can lead to more accu­rate fil­ings. Plus, if you’re like most busi­ness own­ers, you’re prob­a­bly swamped with oth­er tasks through­out the year, so wait­ing until the last minute to file can give you a chance to catch up on oth­er impor­tant busi­ness mat­ters.

Of course, wait­ing until March 31st isn’t a per­fect solu­tion, and I would argue it’s a hor­ri­ble solu­tion all else being equal. You’ll still need to make sure that you have all of the nec­es­sary infor­ma­tion from your con­trac­tors, and you’ll need to be dili­gent about keep­ing track of dead­lines. But if you’re look­ing for a way to sim­pli­fy the process and poten­tial­ly save your­self some time and mon­ey, wait­ing until the last minute could be a good strat­e­gy vis-a-vis omit­ting a required 1099 and/or fil­ing incor­rect 1099s. Bot­tom line, unless you’re not going to do things cor­rect­ly, name­ly cor­rect report­ing and fil­ing, nev­er ever wait until the last minute.

It is impor­tant to note that if you are required to file a 1099 form and miss the dead­line, you may be sub­ject to penal­ties and fines. The amount of the penal­ty will depend on how late the form is filed, and the total num­ber of forms that were not filed on time. The penal­ties are mas­sive and soul destroy­ing, so please, make sure you file the required forms on time, every time.

How to file a 1099 form
If you need to file a 1099 form(s), there are sev­er­al steps you need to take. First, you will need to obtain the nec­es­sary infor­ma­tion from the per­son or enti­ty to whom you made pay­ments. This includes their name, address, and Tax­pay­er Iden­ti­fi­ca­tion Num­ber (TIN). Nor­mal­ly, you won’t deduct amounts, and even if you are, that infor­ma­tion typ­i­cal­ly isn’t required to file because these fil­ing are gen­er­al­ly the amount pro­vid­ed to the oth­er par­ty.

Next, you will need to fill out the appro­pri­ate 1099 form, depend­ing on the type of income you are report­ing. Be sure to dou­ble-check all of your infor­ma­tion. Adjust­ments can be expen­sive on many lev­els.

Strate­gies for Mak­ing the Most of Your Time Before Fil­ing
If you’re plan­ning on wait­ing until March 31st to file your 1099s, there are a few strate­gies you can use to make the most of your time. First, make sure that you have all of the nec­es­sary infor­ma­tion from your con­trac­tors. This includes their names, address­es, and tax iden­ti­fi­ca­tion num­bers. You should also make sure that you have accu­rate records of the pay­ments you made to each con­trac­tor through­out the year.

Com­mon Mis­con­cep­tions About Wait­ing to File 1099s
There are some com­mon mis­con­cep­tions about wait­ing until March 31st to file 1099s. One of the biggest mis­con­cep­tions is that wait­ing will auto­mat­i­cal­ly lead to penal­ties or fees. While it’s true that there are penal­ties for fil­ing late, these penal­ties are based on the num­ber of days that you’re late, not on the date that you file. In oth­er words, if you file on March 31st, you won’t be penal­ized as long as you meet all of the oth­er require­ments.

Anoth­er com­mon mis­con­cep­tion is that wait­ing to file will increase your chances of being audit­ed. While it’s true that the IRS does some­times tar­get busi­ness­es that file late, the like­li­hood of an audit is based on a num­ber of fac­tors, includ­ing the size of your busi­ness, the nature of your indus­try, and your past his­to­ry with the IRS. Sim­ply wait­ing to file your 1099s won’t nec­es­sar­i­ly make you more like­ly to be audit­ed.

It’s also impor­tant to note that wait­ing to file your 1099s won’t impact your abil­i­ty to deduct pay­ments to con­trac­tors on your tax return. As long as you have accu­rate records of the pay­ments you made, you can deduct those pay­ments regard­less of when you file your 1099s.

The Poten­tial Risks of Wait­ing Too Long to File
While wait­ing until March 31st to file your 1099s can be ben­e­fi­cial, there are also some poten­tial risks to be aware of. First, if you wait too long, you run the risk of miss­ing the dead­line and incur­ring penal­ties. The penal­ties for fil­ing late can be sig­nif­i­cant, so it’s impor­tant to make sure that you’re aware of all of the dead­lines and that you have a plan in place to meet them.

Anoth­er risk of wait­ing too long is that you may run into issues with your con­trac­tors. If you wait until the last minute to file your 1099s, you may not have enough time to resolve any issues that arise with your con­trac­tors. For exam­ple, if a con­trac­tor dis­putes the amount of mon­ey that you paid them, you’ll need to resolve that issue before you can file your 1099s. If you wait until the last minute, you may not have enough time to resolve the issue before the dead­line.

Final­ly, wait­ing too long can be stress­ful, expen­sive (direct­ly and/or oppor­tu­ni­ty cost) and time-con­sum­ing. If you’re rush­ing to file your 1099s at the last minute, you may make mis­takes or over­look impor­tant infor­ma­tion. This can lead to even more stress and poten­tial­ly even more penal­ties or fees.

Tips for Stream­lin­ing the 1099 Fil­ing Process
If you’re plan­ning on wait­ing until March 31st to file your 1099s, there are some tips and tricks you can use to stream­line the process. First, make sure that you have accu­rate records of all of the pay­ments you made to con­trac­tors through­out the year. This includes the amount of each pay­ment, the date of each pay­ment, and the name of the con­trac­tor. Hav­ing accu­rate records will make it eas­i­er to fill out your 1099 forms and will help you avoid mis­takes.

Next, con­sid­er using a soft­ware pro­gram or online ser­vice to help you orga­nize your infor­ma­tion and file your 1099s. These pro­grams can help you avoid mis­takes and ensure that you meet all of the nec­es­sary dead­lines. They can also save you time and help you avoid the stress of fil­ing at the last minute.

Final­ly, con­sid­er out­sourc­ing the task of fil­ing your 1099s to a trained pro­fes­sion­al. This can be a good option if you’re short on time or if you’re not con­fi­dent in your abil­i­ty to file accu­rate­ly. A pro­fes­sion­al can help you nav­i­gate the com­plex rules and reg­u­la­tions sur­round­ing 1099 fil­ing, and can ensure that your forms are filed cor­rect­ly and on time. It can also be the cheap­er option after fac­tor­ing in your oppor­tu­ni­ty cost (time), the risk of pay­ing penal­ties (which a lot of busi­ness own­ers end up pay­ing), pay­ing staff to fig­ure it out, and buy­ing extra soft­ware.

The Impact of Time­ly 1099 Fil­ing on Your Busi­ness’s Bot­tom Line
Fil­ing your 1099s on time can have a sig­nif­i­cant impact on your busi­ness’s bot­tom line. First, time­ly fil­ing can help you avoid penal­ties and fees. If you file late, you may be sub­ject to penal­ties of up to $280 per form, depend­ing on how late you file. These penal­ties can add up quick­ly and can have a sig­nif­i­cant impact on your bot­tom line.

In addi­tion to avoid­ing penal­ties, time­ly fil­ing can help you avoid stress and poten­tial legal issues. If you file late and are sub­ject to penal­ties, you may also be sub­ject to legal action. This can be a stress­ful and time-con­sum­ing process, and can poten­tial­ly cost you even more mon­ey in legal fees. Espe­cial­ly if you have to hire a tax attor­ney such as myself to com­mu­ni­cate with the IRS.

Final­ly, time­ly fil­ing can help you avoid issues with your con­trac­tors. If you file your 1099s on time, your con­trac­tors will receive their forms in a time­ly man­ner, and they’ll be less like­ly to dis­pute the infor­ma­tion on those forms. This can help you avoid poten­tial issues and can help you main­tain pos­i­tive rela­tion­ships with your con­trac­tors.

Tools and Resources to Help You Stay on Top of 1099 Fil­ing
If you’re look­ing for tools and resources to help you stay on top of 1099 fil­ing, there are a few options avail­able. First, con­sid­er using a soft­ware pro­gram or online ser­vice to help you orga­nize your infor­ma­tion and file your 1099s. Quick­books for exam­ple works well, and it’s one we use in our office. We’re also a Quick­Books provider, and can offer a dis­count if you would like to get it from us. Oth­er­wise, there are many oth­er account­ing and book­keep­ing pro­grams that work fan­tas­tic at var­i­ous price lev­els too. These pro­grams can help you avoid mis­takes and ensure that you meet all of the nec­es­sary dead­lines. They can also save you time and help you avoid the stress of fil­ing at the last minute.

Anoth­er great option for many, espe­cial­ly new­er busi­ness own­ers is to out­source the task of fil­ing your 1099s to a pro­fes­sion­al. This can be a good option if you’re short on time or if you’re not con­fi­dent in your abil­i­ty to file accu­rate­ly. A pro­fes­sion­al can help you nav­i­gate the com­plex rules and reg­u­la­tions sur­round­ing all tax fil­ings and can ensure that your forms are filed cor­rect­ly and (hope­ful­ly) on time. Feel free to reach out if you would like to hire us to file your forms, pro­vide tax advice, and/or bookkeeping/accounting.

Final­ly, make sure that you’re aware of all of the dead­lines and require­ments sur­round­ing 1099 fil­ing. The IRS web­site has a wealth of infor­ma­tion on this top­ic, includ­ing dead­lines, penal­ties, and the forms that you need to file. Make sure that you’re aware of all of the require­ments and that you’re tak­ing steps to meet them.

Con­clu­sion
As a busi­ness own­er, don’t wait until the last nano sec­ond, albeit if you don’t have the abil­i­ty to file cor­rect­ly, wait­ing until the end of your time lim­it may be the bet­ter option. As always, nev­er trust any­thing on the inter­net, and no war­ranties or guar­an­tees of accu­ra­cy are pro­vid­ed here. You want to use this infor­ma­tion as a start­ing point, and not rely on it for your actions.