5 Common Mistakes in 1099 Filing (And How to Avoid Them)
1099 forms are essential for reporting payments made to non-employees, such as freelancers, contractors, or vendors. Filing Form 1099 might seem straightforward, but small mistakes can lead to big problems. Missed deadlines, incorrect information, or misunderstanding requirements can result in penalties and unnecessary stress for your business.
Why Accurate 1099 Filing Matters
Accurate 1099 filing isn’t just for avoiding penalties—it’s about maintaining your business’s credibility and ensuring smooth tax preparation. Clean and accurate information returns help you:
• Meet IRS compliance.
• Maintain accurate income tax records.
• Avoid unnecessary stress during tax season.
5 Most Common Mistakes in 1099 Filing:
1. Missing Deadlines
Form 1099 filing deadlines are strict, and missing them can lead to significant penalties, ranging from $50 to $280 per form (depending on how late the filing is). If you intentionally fail to file, the penalties can be even higher.
Missing deadlines can also create unnecessary stress during tax season, as you’ll need to rush to catch up while juggling other responsibilities. Meeting deadlines is crucial to staying compliant with the IRS and avoiding additional costs for your business.
Key dates to remember:
January 31: You must provide the appropriate 1099 form to the recipient by this date. If you’re filing a Form 1099-NEC (Non-Employee Compensation), it must also be submitted to the IRS by this date, whether filed electronically or by paper.
February 28: This is the deadline for filing forms like the 1099-MISC by paper with the IRS. Make sure all forms are accurate and mailed on time to avoid penalties.
March 31: If you’re filing electronically, this is the IRS deadline for most 1099 forms except the 1099-NEC.
Tip to avoid this mistake: Make sure to add these dates to your calendar and that you are working with a professional who tracks these deadlines for you.
2. Filing the Wrong Form
Confusion between Form 1099-MISC and Form 1099-NEC is a common mistake since they were previously combined into a single form for various payment types. However, the IRS reintroduced the 1099-NEC in 2020 to specifically report non-employee compensation (e.g., payments to independent contractors or freelancers). Now, the 1099-MISC is used for reporting other types of payments, such as rent, royalties, or prizes and awards.
It’s important to correctly determine which form to use based on the type of payment to avoid filing errors or penalties. Always double-check the payment type and IRS guidelines when filing.
3. Incorrect or Missing Information
Minor errors, such as misspelled names or incorrect payment amounts, can create significant issues for both the IRS and your business. These mistakes can delay processing, cause discrepancies in your financial records, and may lead to costly penalties ranging from $50 to $280 per incorrect form, depending on when the errors are corrected.
Additionally, inaccurate filings can trigger audits or requests for corrections, adding unnecessary stress and administrative work.
Tip to avoid this: Make sure you double-check all information, including TINs, business names, payment amounts, and filing details, to ensure accuracy before submission. Hiring a professional bookkeeper can help minimize these errors and ensure compliance with IRS requirements.
4. Overlooking State Filing Requirements
Some states have their state filing requirements for 1099 forms in addition to the federal filings required by the IRS. These state-specific rules can vary, with some states requiring direct submission of 1099 forms to their tax agencies, while others participate in the IRS Combined Federal/State Filing (CFSF) Program, where the IRS shares certain 1099 data with participating states.
However, not all states accept this program, and failing to check your state’s requirements can result in compliance issues, penalties, or missed tax reporting obligations
To avoid issues: Ensure you research and comply with your state’s rules or work with a bookkeeping professional who can manage federal and state filings for you.
5. Waiting Until the Last Minute
Leaving 1099 filing to the last minute often results in unnecessary stress and mistakes, such as missing recipient details, misclassifying payments, or entering incorrect amounts. If issues arise, you may not have enough time to resolve them before the IRS deadlines. This can also affect your compliance with state filing requirements, potentially causing further delays and penalties.
To avoid the rush: Start preparing at least two months early by gathering all necessary documents, such as bank account statements, recipient TINs, and payment records for the calendar year.
Partnering with professional services well in advance can further streamline the process and ensure you meet all deadlines without last-minute hassles.
Get Ahead for 2025: Simplify Your 1099 Filing!
Don’t let deadlines and filing requirements catch you off guard. Preparing early for the 1099 form ensures accurate reporting and avoids costly penalties.
Gather your records
Stay compliant with federal and state rules
Let Simplifi Bookkeeping handle the details
Don’t wait until the last minute—let’s make your 2025 filing smooth and hassle-free.
