1099s are supposed to be sent to recipients no later than January 31, but the true deadline is February 28. That is the deadline for mailing your 1099s to the IRS.

Read my main article on 1099 preparation to see how simple it is, but pay attention to the pointers in this article if you are preparing the forms in February.

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Here's what you do. Immediately. (This is February, so time is of the essence.)

First, get your hands on some forms

This may not be as simple as it sounds. 1099 forms cannot be downloaded from the Internet like most tax forms, because they are red, scannable jobbers. You can order them for free from the IRS (they should take 7 to 14 days to come) or you can get right down to your local office supply store and buy them. I recommend you do BOTH. NOW! If you order immediately, the forms may come quickly enough to meet the February 28 deadline. Also, you may get down to the store and find their packages of 1099s are all bought out. There is a rush on these forms towards the end of January. If it's after February 15 already, you need to go to more than one store until you find the forms.

See my main article on 1099 preparation for specifics on the number and type of forms you will need.

Second, talk to your service providers

Call all of your service providers. Let them know that you will be sending them a 1099 and apologize for it being late. If possible, tell them how much income will be shown on the form. That way, the delay in receiving your form will not hold up their tax preparation.

If you don't have a service provider's tax id number, get that information over the phone. Get their full legal name and mailing address, too. If the worker refuses to cooperate, you should document this in your records. You should also send them a Form W-9, since that's the official way to request someone's tax id number. Document sending the W-9, too.

Such documentation may help to protect your deduction in case you can't prepare a 1099 and you later get audited, but don't count on it. It definitely won't help if you continue to hire the person year after year. Decide how much it's worth to you to be able to deduct your payments to this person on your tax return and look for a new service provider if you want to be able to prepare a 1099 next year. Have new workers fill out Form W-9 right when you hire them.

Third, prepare the forms and mail them no later than February 28

See my main article on 1099 preparation for step by step instructions.

Posted on 2009-01-04 17:19:55