The deadline for issuing Form 1099-Misc to contractors reminds me of my anniversary. I know when it is every year because the date never changes, yet some how I’m always racing around the day before trying to stave off disaster. Well not this year, I told myself. The Form 1099s must be sent to contractors whom we’ve paid at least $600 in the past year by January 31, 2008. Mike and I always divide the labor on this one. He gets me all the data, and I complete the forms and send them out. He was going to get me the data weeks ago. So far I haven’t received it, and he’s out of town until Monday (which means, among other things, that he can’t edit this post). So here we go again. But I thought this would be a good time to review the 1099 rules for real estate investors:
- Who gets a 1099: Each person to whom you paid during the past year at least $600 in services. Payments to a corporation generally are not reported on Form 1099. Certain payments to lawyers are reportable regardless of amount. You can check out the details in the IRS Instruction for Form 1099-MISC.
- Deadline: Form 1099s must be sent out to the contractors by January 31, 2008. They are due to the IRS by February 28, 2008, unless you’re file them electronically, in which case the due date is March 31, 2008.
- Penalties for late filing: There are a range of penalties for filing the 1099 late, generally up to $50, although it can be much higher in extreme cases.
- Don’t forget state filing requirements: The requirements vary from state to state as to whether you are required to file a 1099, so be sure to check your state’s requirements.
How to prepare 1099s
Although you can file electronically, we never have. We buy a Form 1099 packet from Staples and prepare our own. In a typical year we issue fewer than 10, and I think this year we’ll issue fewer than 5. Staples and other office supply stores sell the forms bundled with software for data entry and printing. The process is simple and only takes a few minutes once you have all the data collected.
Now if I could only get Mike to send me the #@!% data!