Jan. 31, 2024 is the deadline for submitting Form 1099s to recipients of certain payments your business made during the previous tax year. If you are a business owner, CFO, controller or responsible for your company's accounts payable department or tax filings, you may know that 1099s are an informational return that is required to be filed with the IRS and issued to recipients to report these payments. There is often some confusion about the 1099 process and related rules, and the Jan. 31, 2024 filing deadline sometimes sneaks up on companies.
1099 overview
Here are some high-level tips to ensure you are in compliance with your 1099 obligations. These tips will focus on the rules that apply to payments by accounts payable departments to vendors and service providers (partnerships, contractors and individuals) and not on other 1099 rules that apply to payments to investors for interest, capital gains or dividends they receive. Those rules are specific to the financial services industry and are usually handled by banks, brokerage firms or similar financial services companies.
The specific instructions for who must file are included on each type of 1099, of which there are many. The most common 1099 forms that impact companies' payments to vendors (such as through the accounts payable department) are the 1099-MISC and the 1099-NEC (Non-employee compensation). The 1099-MISC is used to report rent or royalty payments, payments for services performed for a trade or business by people not treated as its employees, certain payments of gross proceeds to attorneys, TV or radio show winnings, and other specific payments. The 1099-NEC is used only for contractors. See the IRS guide to information returns for more detailed information about the 1099-MISC, 1099-NEC and other 1099 forms.
What do I need to know about 1099s?
At a high level, an accounts payable department principally needs to know:
