Penalty for Not Filing 1099 (MISC or NEC)

You may file or receive 1099-MISC and 1099-NEC in tax season. If you are a business owner, freelancer or independent contractor. These Forms are used to report the non-employee compensation paid to contractors or freelancers, but missing the filing deadlines can result in significant penalties.

In this brief, we will explain:

• What a 1099 form is
• Penalties for not issuing or filing 1099s
• What happens if you file late
• How to correct mistakes
• Tips to avoid penalties

What is a 1099 Form?

The 1099 form is not for reporting income from a regular job. Instead, it is used for reporting other kinds of income, such as:

• Money paid to freelancers or independent contractors
• Rent income
• Royalties
• Interest or dividends
• Prizes, awards, or legal settlements
• Non-employment compensation

You need to file a 1099 Form to report the payments made. If you pay someone $600 or above in a year, as a business owner or employer.

Note: The 1099 NEC reports nonemployee compensation, and 1099 MISC covers miscellaneous income.

When Are 1099 Forms Due?

The following are the different deadlines depending on the Form’s specification. Be careful about dates because missing the deadline causes penalties for late 1099 filing.

• Form 1099-NEC Deadline 2025 :
  • Recipient copy must be issued by January 31.
  • IRS Filing is due on January 31, there are no extensions available for paper filing.
• Form 1099-MISC Deadline 2025:
  • Recipient Copy must be issued by January 31.
  • IRS Filing:
  • Paper filing due February 28.
  • E-file due March 31.

What Happens if You Don’t File a 1099?

It always results in costly penalties in case of failure to file a 1099 Form. The penalty for not filing a 1099 depends on how late you are. Here’s what you could face, according to the IRS:

1. Penalties for Late Filing

• The penalty is $60 per form up to 30 days late.
• The penalty increases to $130 per form 31 days late to August 1
• The penalty jumps to $330 per form after August 1, or if not filed at all
• If the failure to file is due to intentional disregard of the rules, the fine is $660 per form, with no maximum limit.

These penalties add up quickly if you have a significant number of contractors and are filing a late 1099 form. This scenario leads to hundreds or even thousands of dollars in fines.

2. Additional Penalties for Mismatched Information

If there is any mistake in the 1099 form, you can also be subject to a fine for failure to file correct information returns. The cost of these penalties can range from $50 to $550 per error, depending on the time of correction. And you can save it by investing a fraction of the cost on the e-filing process. See our price plan!

What About 1099 Corrections?

Don’t panic! If you notice an error after filing, you can file 1099 corrections. The IRS allows you to amend 1099 forms if they contain mistakes. You can also correct a late filed 1099.

However, keep in mind:

• Correcting late 1099 forms may still incur penalties.
• It is best to file corrections before August 1 to avoid penalties after the due date.

When Can You File 1099 Forms Late?

The IRS provides a small window for late filing if you miss the deadline.

The penalties increase as time goes on. If you are filing late, the key is to act fast. Filing late 1099 forms is always better than not filing them at all.

How to Avoid Penalties for Not Filing 1099?

You can speed up your filing process and avoid penalties by following a few steps:

• File 1099 forms by the deadline. Form 1099 NEC has no extensions for filing. So, plan accordingly.
• Recheck your personal information once again. Errors in form can lead to penalties for failure to file the correct information.
• If you find any mistakes in your form, file a correction as soon as possible. It will lower the risk of heavy fines.

When Can You File 1099 Forms After the Deadline?

You can file 1099s after the deadline. But it is good to file as soon as possible to minimize the penalties. If you fail to meet the deadline to issue 1099 forms, even if you miss the due date for the 2024 1099 filing, don’t ignore the situation. It is always better to correct the forms than not file at all!

Conclusion:

Moreover, you can avoid the penalty for not filing 1099 by submitting forms on time and fixing any mistakes as soon as possible. If this process seems overwhelming, our E-file Workforce Payroll is here to help you with the E-filing process.

We simplify the entire E-filing process for you, from collecting contractor details to submitting accurate forms. So you can avoid late fees and reduce errors.

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