Thanks for asking your question! I'm sorry to hear about your tax
issue and I'm going to try my best to help you understand or resolve it.
Thank you for your question, and thanks for using JustAnswer.com. Sending a 1099-MISC
is required when you pay more than $600 per year to any one vendor. This makes it so that income
earned by the vendors is reported to the IRS
so that they are certain that they receive taxes for it.
This does not impact your business in terms of increasing your tax, but it does provide documentation for deductions
taken. If you do not file 1099 forms
when required, The IRS states
If you fail to file a correct information return by the due date and you cannot show reasonable cause, you may be subject to a penalty. The penalty applies if you fail to file timely, you fail to include all information required to be shown on a return, or you include incorrect information on a return. The penalty also applies if you file on paper when you were required to file electronically, you report an incorrect TIN or fail to report a TIN, or you fail to file paper forms that are machine readable.
The amount of the penalty is based on when you file the correct information return. The penalty is:
$30 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $250,000 per year ($75,000 for small businesses, defined below).
$60 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $500,000 per year ($200,000 for small businesses).
$100 per information return if you file after August 1 or you do not file required information returns; maximum penalty $1,500,000 per year ($500,000 for small businesses).
So, you must file 1099 forms whenever you pay someone more than $600 in a year.
Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.
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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.