Common Misconceptions on 1099 Reporting

December 16, 2013

1. Misconception: 1099 Reporting for the state is not necessary if there is no state tax withheld. Truth: The majority of states’ regulations say that 1099s have to be filed regardless of withholdings. Look up your particular states regulations.    2. Misconception: Copy A of the IRS 1099 Form can be printed in black or red ink and filed to the IRS. Truth: Copy A of the IRS 1099 Form must be printed in drop-out red so that it will be correctly processed on the IRS side.   3. Misconception: Every employer who provides health care insurance through an employer sponsored plan must report the cost of the coverage on the employees W-2. Truth: This only applies for employers who file more than 250 w-2 forms.   4. Misconception: Using the combined federal/state 1099 filing program means that you meet all the state’s 1099 requirements. Truth: Not all states participate in the program and many of the states that do still mandate 1099s with state withholding be sent directly to the state.   5. Misconception: The e-filing threshold for 1099 filing is the same as the federal e-file threshold Truth: States have to ability to set their own e-file threshold. So, be aware of your particular states limits.  

Make sure that you stay informed on 1099 reporting and compliance to avoid any unnecessary grief incurred from accidental non-compliance penalties.

Source: CPA Accounting Today