This announcement is meant for all of our self-employed clients (Schedule C), and all of our landlord clients (Schedule E).
There are penalties for not filing form 1099 to the government and to your subcontractors who are not incorporated, regarding your payments to them during the year. These payments would be for either services performed by them, or repairs and improvements made by them. Both the IRS and your state accept these filings.
This is our way of making sure that we can answer IN THE AFFIRMATIVE, the question on your tax return that you DID COMPLY with the 1099 filing requirements. By making this announcement to notify you of the filing requirements, now we can affirm that you did so, within the deadline limits, when we prepare your returns. This question has been on the forms every year, for both schedules C and E.
Reporting Payments to Independent Contractors:
What is a Form W-9?
Online service for annual 1099 reporting:
Avalara will take care of notifying the government and your subcontractors.
If you do not want to pay Avalara’s fee ($2 per form ?), you can do it yourself by requesting from us the actual forms that you must complete and file, and then mail them yourself, to the government and to your subcontractor(s). These forms WON’T be in our Tax Organizer packets because they have an earlier due date than your Form 1040.
In the end, you need to make sure that your subcontractors report their proper income to the government. If you haven’t completed the forms yet, let your subcontractors know ASAP that you will be reporting their payments that you made, so they will report and pay their fair share of taxes.