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Squire provides complete and personalized tax management and planning solutions to meet your needs.

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Squire provides complete and personalized tax management and planning solutions to meet your needs.

The Ultimate 1099 Guide

As you start this new year, we know that your list of important “to‐do’s” is long. Between chaos of the holidays and year‐end closing processes, it’s easy to miss some of the various required IRS filings. One filing that sometimes slips through the cracks is the 1099. We’ve prepared this guide to help you in gathering the information needed to file your 1099s. It also includes some tips on how to prepare for your 1099 filings and avoid last‐minute stress.

Included in this guide:

  • 1099 Basics – What are 1099s and who do you need to provide them to?
  • Data to Gather – What information do you need from those receiving 1099s?
  • TIN Verification Process
  • Squire Services

If you have any further questions, please feel free to contact us at 801‐225‐6900.

1099 Basics

What is a 1099?

A 1099 is a form of information return required by the IRS. There are several different types of 1099 forms, the most common being a 1099‐MISC which is required for independent contractors. This form is similar an employee’s W‐2. Other common 1099 form types include a 1099‐INT and 1099‐DIV. A 1099‐INT is required to be sent to a business or individual to which you paid at least $10 of interest to during the year. A 1099‐DIV is required to be sent to individuals which you have paid at least $10 in dividends during the year. For more information on the different types of 1099 forms that may be required, please visit https://www.irs.gov/uac/about-form-1099 or contact Squire at 801‐225‐6900.
Please note, as you file your business tax return you are attesting to the IRS that all appropriate 1099 forms have been filed.

Due Dates:
January 31, 2017 – 1099‐MISC form mailed out to contractors
January 31, 2017* – Electronic or paper filing with the IRS

*Please note that this date has changed for the 2016 filing year. In an effort to reduce identity fraud, the IRS is requiring that all 1099s be mailed and filed by January 31, with increased penalties for late filing.

Who receives a 1099‐MISC?

  • Independent contractors
    • Any contractors you have paid $600 or more during the year. This includes:
      • Money paid
      • Value of services exchanged
      • Value of prizes and awards
      • Any other income payments
    • Includes companies that are sole proprietors, partnerships, or LLCs
    • Does not include incorporated companies
  • Lawyers
    • You are required to send a 1099‐MISC to all lawyers/law firms, even if they are incorporated
  • Rents
    • Any company who you paid $600 or more in rents to throughout the year

 

Data To Gather

For every independent contractor, you need to collect a W‐9 Form* which includes:

  • Company/individual name, address and TIN (tax identification number)
    • Although TIN verification is not required, we highly recommend verifying each vendor’s TIN with the IRS. If a submitted 1099 does not match IRS records, you will receive a notice from the IRS. See below for steps on how to register for TIN verification with the IRS.
    • Company type (LLC, Corporation, Partnership, Sole Proprietorship)
    • Signature and date of company/individual
*Note: A W‐9 form should be collected for all independent contractors, even if they are incorporated, as proof of entity type. Link to download Form W‐9 can be found here.

TIP: We have found it useful to require receipt of a W‐9 form for any new vendor before first payment is remitted. For existing vendors for whom you do not have a W‐9, it may be a good idea to require one before issuing their next payment. It is also a best practice to verify all vendor TINs and other information throughout the year rather than during 1099 preparation.
From your financial records, you will then need to have the total amount paid to that individual/company for the applicable tax year.

 

IRS TIN Verification Process

User Information

Getting setup

  1. (Click on “REGISTER” on IRS Login page to access form)
    • Some required info:
      • AGI for one of the last three years.
    • No access fee.
    • Available 24 hours a day.
    • Adding Authorized Users
      • See p. 13 of IRS Publication 2108A (link below)
  2. Using the system
    • IRS e‐services login page
      • IRS.gov > For Tax Pros (Drop‐down menu, top right) > Access e‐Services (Mid‐page leftside) > Login or Register (Mid‐page left side)
    • Select TIN Matching
      • 1. Accept terms (after each log in)
    • Two options for submission
      • 1. Individual TIN Verify Session
        • a. Enter each name and TIN one at a time, submit as a batch.
        • b. Instant response
      • 2. Bulk TIN Verify Session
        • a. Must be in .txt format
        • b. .txt file must contain the following information (TIN TYPE; TIN NUMBER;NAME)
          • i. TIN Type
          • 1. “1” represents and Employer Identification Number (EIN)
          • 2. “2” represents a Social Security Number (SSN)
          • 3. “3” represents an unknown TIN type.
            • ii. TIN Number (Must be 9 digits)
            • iii. Name
              • 1. Omit any special characters that are part of the business namewith the exception of hyphens (‐) and ampersands (&).
              • 2. Enter a minimum of 1 and a maximum of 40 alphanumeric characters.
        • c. Takes up to 24 hours to get a response
        • d. Bulk TIN Matching files may contain up to 100,000 name/TIN combinations.
  3. FAQs/Tips
    a. Passwords expire every 6 months.
    b. PINs never expire.
    c. Complete guide: IRS Publication 2108A

 

Squire Services

Services offered:

  • TIN Verification
  • Preparation of 1099 forms
  • Mailing of 1099 forms
  • Electronic filing of 1099 forms
Any additional services, such as research for vendor information, data migration, or rejected TIN verification issues, will be charged by the hour.

 

Price:

Please contact Squire at 801‐225‐6900 for a quote regarding 1099 pricing.
1099 information is required to be remitted to Squire by Wednesday, January 25th to guarantee an ontime filing. Rush fees may apply to any information received after the 25th.

 
We cannot guarantee on‐time filing if information is received after Wednesday, January 25th.

 

NOTE: Missing W9/Vendor Info
We are aware that there are circumstances in which you may have difficulty in receiving a W9 or other 1099 information from a vendor. Please note that you may still take advantage of the discount if all other 1099 information is submitted to us before the deadline. If you have any questions, feel free to contact us.

If you plan to use Squire’s 1099 services, please notify us as soon as possible so we can plan accordingly.