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Filling Out the 1099 2014 Form

As you begin to close your books and prepare tax documents, you need to think about whether you employed any independent contractors or made payments to vendors or other businesses. If so, add the form 1099 2014 to your growing stack of tax documents. Eliminate some stress, though, and use this guide to learn how to fill out the 1099 2014 form with ease.

What Is the 1099 2014 Form Used For?

1099 forms, or “information returns,” are used to summarize all the income paid to non-employees. There are several types of 1099s that business owners can file, and the one a person chooses to use all depends on the type of compensation paid out throughout the year. Some forms of compensation that you may wish to report via a 1099 include but aren’t limited to the following: — Non-employee compensation — Acquisition or abandonment of secured property — Cancellation of debt — Certain government payments — Interest income — Proceeds from real estate transactions — Distributions from an HSA, Archer MSA or Medicare Advantage MSA As a business owner, you are not responsible for paying the taxes on, say, an independent contractor’s earnings, as you would be for a regular employee. However, those taxes still need to get paid. The 1099 form lets the IRS know that compensation was paid to Jane Doe and that it should look to Jane Doe for payments for self-employment tax, Social Security, Medicare and the like. The IRS requires you to fill out and send the 1099 form, but the recipient is responsible for filing a second form€”a Form 1040. The recipient will use a formula to determine how much he, she or it owes the IRS (or how much of a refund to expect).

Who Would Use the 1099 2014 Form?

A small business, corporation, any business entity or any individual engaged in trade or business would use the 1099 if they made payments to certain individuals. The best way to determine if you’re someone who needs to file the 1099 would be to ask yourself if, as part of your trade or business, you made any of the following types of payments:

  • Services performed by independent contractors or other non-employees
  • To physicians, physicians’ corporation or another supplier of health and medical services
  • Attorney fees in excess of $600
  • Interest on a business debt paid to someone or some entity
  • Royalties
  • Rent
  • Prizes and awards

The IRS provides a comprehensive of list of who is required to file the 1099 and for what purpose. The page also provides helpful links to the correct form you will want to submit (Form 1099 MISC, Form 1099-DIV, Form 1099-K, etc.). The page also provides a very brief list of who is not required to fill out the 1099 (namely, anyone NOT engaged in trade or business). If you are engaged in trade or business, it would best to assume that you should file a form.

When Should You Use the 1099 2014 Form?

If you hired any independent contractors during the year and paid any one of them more than $600, you must send out the 1099. This is true if you worked with any partnerships or LLCs as well. The purpose of the form is to ensure that the IRS is aware of all income you paid out for services throughout the year. It also ensures that you are not forced to pay taxes on another person’s or entity’s earnings or income.

While you must send the 1099 2014 form to most businesses or individuals that you may have contracted throughout the year, there are a few exceptions to the rule. You do not have to send a form to most corporations, sellers of merchandise, property managers or real estate agents. However, there are exemptions to the exemptions. You must file the 1099 if you enlisted the services of an attorney, even if he or she is incorporated, or paid medical or healthcare payments in excess of $600. You are also required to fill out the 1099 if you made payments toward royalties, rent, prizes, awards, crewmembers of your fishing boat, for the purchase of fish from anyone engaged in the fishing business or for crop proceeds. If you’re still unsure of whether you should file the 1099 2014, refer to the IRS’s website for a complete list.

What Are the Consequences If You Don’t Use the 1099 2014 Form?

The IRS wants to be made aware of ALL income earned and paid out to all persons, regardless of whether they’re traditionally employed or self-employed. Your filling out the 1099 helps the IRS keep track of that income. The IRS does not look kindly on individuals who fail to do their part. Some consequences of failing to use the 1099 form include the following:

  • As of 2015, penalty up to $100 for every return not filed, and up to $1.5 million per calendar year
  • As of 2016, penalty up to $250 for failure to file, and up to $3 million per calendar year
  • Penalties doubled to $500 for every instance of intentional disregard

Penalties apply to returns that contain the wrong or missing information as well. However, the IRS will reduce the penalty for each return that is corrected and resubmitted within a certain amount of time.

Steps for Filling Out the 1099 2014 Form

Form 1099 is a necessary evil of business ownership. While it’s unlikely that you’ll enjoy filling out this form, you can take the headache out of it by following these 10 simple steps:

  1. Input payer and recipient information in the boxes designated for each. Use any W-9s you have to help make the process easier.
  2. In boxes 1-2, enter rental payments of $600 or more and royalties of $10 or more. In box 3, input any income of $600 or more that you don’t plan to record elsewhere. In box 4, include any backup withholding.
  3. In box 5, specify any fishing boat proceeds.
  4. In box 6, list the amount you paid out in healthcare services.
  5. In box 7, enter how much you paid out in non-employee compensation, such as prize money, fees, commissions and freelance services. 6. In box 8, list any payments you made in lieu of dividends or interest of $10 or more. Check box 9 if applicable. 7. Report crop proceeds of $600 or more in box 10. 8. Use box 13 to report golden parachute payments and 14 to report any fees paid to an attorney if in excess of $600. Use boxes 11 and 12 to report excess of these types of payments. 9. If you have them, list Section 409 deferrals in boxes 15a and 15b. 10. Boxes 16-18 are reserved for the payer’s state tax information.1
1099-204

Quick Questions

No, you cannot. The 1099 2014 form may only be filed on paper, so you cannot prepare and eFile one online.

Each contractor must receive her or his copy of the 1099 by no later than February 1 of the filing year. Failure to meet this deadline may result in the same penalties mentioned above.

Resources:
https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return
https://www.efile.com/what-is-form-1099-misc-income-tax-return-requirements/#what-is-a-1099
http://www.facpa.com/documents/Web_1115A

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