Form 1099 filing for 2023 tax year

Read about changes effective for the 2023 tax year, among other important information and deadlines.

 

As you prepare for the 1099 filing season, note the changes effective for the 2023 tax year:

  • Form 1099-NEC: Beginning in year 2022 and forward, IRS released a continuous-use format version of Form 1099-NEC to be used. No changes have been made to the form for 2023.
  • Threshold for Form 1099-K: A new requirement was due to take effect beginning Jan. 1, 2023, in which third-party platforms, such as Venmo and PayPal, would be required to send 1099-Ks to merchants when the gross amount of total reportable payments exceeds $600 in a calendar year. However, in late November 2023, the IRS announced a delay of the new threshold. Thus, there will be no change in reporting from prior years; reporting will continue to be required when the total number of transactions exceeds 200 and the gross amount of reportable payments exceeds $20,000 in a calendar year. The IRS is now planning a phase-in threshold of $5,000 for tax year 2024.
  • New online portal: The IRS launched a new free online portal, IRIS, for businesses to file 1099 returns for tax years 2022 and later. Enrollment is required for the IRIS platform. Beginning January 2024, you will no longer be able to electronically file using your legacy transmitter code using the FIRE system.
  • Effective for returns required to be filed on or after Jan. 1, 2024 (2023 year-end), you must file 1099 Forms electronically if you have 10 or more information returns (down from 250). Learn more in the “Electronic filing requirement update” section below.
  • Many states participate in the Combined Federal/State Filing Program. The IRS will automatically forward 1099 information to participating states, eliminating the need to file separately with these states. Refer to state 1099 filing requirements to understand your state’s requirements.

Read on for additional important information and deadlines.

Employer requirements

Form 1099-NEC

  • Report payments of $600 or more made to nonemployee service providers, such as independent contractors, consultants, accountants, cleaning professionals, landscapers, and other self-employed individuals, as well as non-incorporated entities, which includes any partnership, limited liability company (LLCs), limited partnership (LP), or estate. This also includes professional fees paid to attorneys (including law firms established as corporations).
  • Report backup withholding.

Form 1099-MISC

Report all other types of miscellaneous compensation paid in the amount of $600 or more in your ordinary course of trade or business, such as rents, prizes and awards, certain medical and healthcare payments, and other income, as well as royalties paid over $10.

Electronic filing requirement update

The IRS has released final regulations mandating that businesses that file 10 or more returns in a calendar year – previously more than 250 – must file electronically effective for returns required to be filed on or after Jan. 1, 2024. Paper filing is no longer an option. Filers must aggregate almost all return types covered by the regulation to determine whether they meet the 10-return filing threshold. (This includes such forms as W-2s, 1099s, and other business return types.)

Extensions

While the IRS allows an automatic 30-day extension for certain Forms 1099, there are very limited circumstances for requesting an extension for Forms W-2 and 1099-NEC. Contact your CohnReznick engagement team or other trusted tax advisor with any questions.

Penalties

Failure to comply with the various filing deadlines and requirements may expose a business to the following significant penalties:

  • Failure to file the correct information returns or furnish the correct payee statements by the due date:
    • Small businesses (average annual gross receipts of $5 million or less for the most recent three taxable years): $60-$310 per recipient, depending on when you file/furnish, with a maximum penalty of $1,261,000 per year
    • Large businesses (average annual gross receipts of more than $5 million): $60-$310 per recipient up to a maximum of $3,783,000 per year
  • For failure to provide a correct information return or payee statement due to intentional disregard, the penalty is at least $630 per 1099 or statement with no maximum penalty.

If you have received Form 1099 non-matching notices, be vigilant and follow up with your vendors or you may be penalized for the maximum amount per incorrectly filed recipient.

2024 due date summary chart

 

Due to recipient

Paper file IRS**

E-file IRS

1099-NEC*

1/31/24

1/31/24

1/31/24

1099-MISC (without data in boxes 8 or 10)

1/31/24

2/28/24

4/01/24

1099-INT

1/31/24

2/28/24

4/01/24

1099-DIV

1/31/24

2/28/24

4/01/24

1099-R

1/31/24

2/28/24

4/01/24

1099-B & 1099-S

2/15/24

2/28/24

4/01/24

1099-MISC (with data in boxes 8 or 10)

2/15/24

2/28/24

4/01/24

*The due date for submitting to the IRS is the same as for providing it to the recipient, regardless of whether filing by paper or electronically
**Submission to the IRS if filing by paper is February 28, 2024

Important calendar reminder

To timely prepare and e-file your forms, provide your data to your tax team by Jan. 15, 2024.

Subject matter expertise

  • profile-thumbnail
    Contact Jimit Jimit+Mehta jimit.mehta@cohnreznick.com
    Jimit Mehta

    Senior Manager, Tax

  • profile-thumbnail
    Contact Susan Susan+Cooper susan.cooper@cohnreznick.com
    Susan Cooper

    Senior Manager, Tax

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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.