Form 1099 Updates & Reminders

New: e-filing threshold LOWERED for information returns, AND A NEW ELECTRONIC INFORMATION RETURNS INTAKE SYSTEM

Beginning with tax year 2023, for anyone needing to file 10 or more information (IRS Form 1099) returns, paper-filing is no longer permitted; these forms must now be filed electronically. This may include Forms 1099-MISC, 1099-NEC and 1099-INT, which are some of the more common types of information returns filed. Tronconi Segarra & Associates prepares information returns and submits all filings electronically and will continue to offer this service to our clients.

However, for those that prefer to self-prepare information returns, the Internal Revenue Service (IRS) has launched a new system to help facilitate the electronic filing requirement. Taxpayers can now register to file through IRIS, the Information Returns Intake System. The IRIS system is a free service through the IRS that allows taxpayers to electronically file required information returns. It allows taxpayers to submit up to 100 records per upload and to also file corrected 1099 forms. The system is available to individuals, businesses regardless of size and governmental agencies. IRIS can also be used to submit late returns for years prior to 2023 that are above the electronic filing threshold.

Users of the IRIS system must apply for a Transmitter Control Code (TCC) before filing Forms 1099 on the system. The IRS will review each application and supply a written confirmation as to acceptance into or rejection for the program. Typical applications will be processed within 45 business days, but may take longer depending upon demand.

We recommend that any taxpayer that intends to self-prepare these forms for the coming 2023 tax filing apply now for the TCC, create an IRS online account (if you do not currently have one), and review the IRIS tutorial to become acclimated with the system. With the January 31, 2024 filing deadline quickly approaching for information returns, the process should be initiated soon to ensure access is readily available.

New 1099-K Requirements:

Payments of more than $600, made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099‑K by the payment settlement entity. Prior to 2023, Form 1099-K was issued when the number of transactions exceeded 200 for the year and the dollar threshold exceeded $20,000. Now, any transaction over the $600 limit will require a 1099-K filing. Note that these payments are not subject to reporting on Form 1099‑MISC.

Money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses are not taxable.

Due dates:

Form 1099-NEC must be filed with the IRS on or before January 31, 2024, using either paper or electronic filing procedures. Form 1099-MISC should be filed with the IRS by February 28, 2024, if paper filed, or March 31, 2024, if filed electronically.

Note: All 1099s are due to the recipients by January 31, 2024.

Additional Reminders:

Confirm that all ID numbers and Social Security numbers are accurate before completing/issuing any 1099s.

The IRS can charge a penalty from $60 to $310 per form, depending on the time period past the deadline for issuing the form. If the non-filing or incorrect filing is intentional, the IRS can levy a minimum penalty of $630 per form or up to 10% of the income reported on the form.

The Internal Revenue Service requires anyone engaged in trade or business to file Form 1099. A Form 1099 must be filed for each person to whom you have paid during the year:

  • At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
  • At least $600 in rents, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, section 409A deferrals, non-qualified deferral compensation, and generally, the cash paid from a notional principal contract to an individual, partnership or estate.
  • Any fishing boat proceeds.
  • Gross proceeds of $600 or more paid to an attorney; or
  • Reportable Payments to Corporations – In general, payments to corporations do not need to be reported on a 1099. However, the following payments made to corporations generally must be reported:
    • Cash payments for the purchase of fish for resale;
    • Medical and health care payments;
    • Gross proceeds paid to an attorney; and
    • Substitute payments in lieu of dividends or tax-exempt interest.

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