What’s changed on the 1099 MISC Form for the 2022 Tax Year?
Tax season is almost here and it’s time to begin considering your business’ year-end filing requirements. As an employer, it is essential that you are aware of any IRS changes and updates to the forms you are required to file. In this article, we will address updates made to Form 1099-MISC for the 2022 tax year.
Before we take a deep dive into the IRS updates, here is an overview of Form 1099-MISC.
What is Form 1099-MISC?
Form 1099-MISC is an IRS information return that is filed by a business entity that has made payments of over $600 to another business or individual in the course of trade or business throughout the tax year. These payments are not considered non-employee compensation.
- Rents
- Prizes and awards
- Healthcare payment
- Payment made to an attorney (Not for attorney legal fees)
- Any fishing boat proceeds.
- Crop insurance proceeds.
- Other income payment
Exceptions to the $600 Minimum Rule
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- Payment is withheld under the backup withholding rule, even if the payment made is less than $600
- Direct sales of at least $5,000 or more
What’s new in Form 1099-MISC?
The IRS has made a few changes to Form 1099-MISC effective for the tax year 2022.
Box 13 is now a checkbox for the Foreign Account Tax Compliance Act (FATCA) filing requirement. As a result, the original boxes 13–17 have been renumbered. They are now boxes 14–18.
The original Box 13 used to report the excess golden parachute payments is now renumbered to Box 14.
The original Box 14 used to report the payment under NQDC plans has been now renumbered to Box 15.
The original Box 15 used to report the state-withheld taxes has been now renumbered to Box 16.
The original Box 16 used to report the payer’s state number has been renumbered to Box 17.
The original Box 17 used to report the state income has been renumbered to Box 18.
When to file Form 1099-MISC?
Form 1099-MISC must be distributed to the recipient on or before January 31st. Paper copies of Form 1099 MISC must be filed with the IRS before February 28th, and e-filing must be reported to the IRS before March 31st.
If any of the deadlines fall on a public holiday or weekend, the deadline will be moved to the next business day.
The 2022 Deadline for Form 1099-MISC
Recipient copy — January 31, 2023.
Paper filing — February 28, 2023.
E-filing — March 31, 2023.
Penalties for late Filing Form 1099-MISC
The IRS penalizes businesses that fail to meet their filing requirements.
If you fail to provide correct information or submit form 1099-MISC before the deadline, you will likely face an IRS penalty. The penalty rate will vary depending on how late the filing is.
The following are potential IRS penalty rates.
If the form is filed within 30 days from the deadline, businesses could be charged a minimum penalty of $50/form to a maximum of $194,500 for small businesses, and $556,500 for larger businesses.
If the form is filed after 30 days from the deadline and before August 1st, businesses could be charged a minimum penalty of $110/form to a maximum of $556,500 for small businesses, and $556,500 for larger businesses.
If the form is filed after August 1st, businesses could be charged a minimum penalty of $110/form to a maximum of $1,113,000 for small businesses, and $3,339,000 for larger businesses.
How to File Form 1099-MISC?
Form 1099-MISC is a multipart form. Here are the parts of this form and where to send each:
- Copy A must be filed with the IRS.
- Copy B and Copy 2 should be issued to the recipient.
- Copy C should be retained for your records.
- Copy 1 should be filed with the state taxing authority.
You can obtain a 30-day extension period to file Form 1099-MISC by filing Form 8809. This form must be filed with the IRS by January 31st. This only extends the time to E-file Form 1099-MISC with the IRS, it doesn’t extend the deadline to distribute copies of the form.
Businesses can either file paper copies of Form 1099-MISC or file 1099-MISC electronically.
Today, a majority of businesses file their Form 1099-MISC online (e-filing). Even the IRS advises taxpayers to e-file tax return forms because electronic forms are easier and more convenient for them to keep track of records.
Under the TaxPayers First Act of 2019, there could be a reduction in the mandatory e-filing requirement limit from 250 to 100. The proposal has not been finalized yet, but there is a chance that it could affect your 2022 reporting.
If you are planning on making the switch to e-filing this tax season, TaxBandits is a great option. As an IRS-Authorized, market-leading e-file provider, TaxBandits offers time-saving features that streamline the e-filing process for an affordable rate.
