Don’t Risk Filing Penalties
It pays to mind the tax-filing deadlines, too. Late filing of mandatory 1099s could lead to penalties ranging from $50 to $260 per 1099, with a maximum of $1,064,000 a year for your small business.
The amount of the penalty is based on when you file the correct information return, as follows:
- $50 per 1099, if you file within 30 days of due date; maximum penalty of $186,000
- $100 per 1099, if you file more than 30 days after the due date
but by August 1; maximum penalty of $532,000
- $260 per 1099, if you file after August 1, corrections aren’t filed
or the form isn’t filed at all; maximum penalty of $1,064,000
In all cases, the IRS considers you to be a small business if you’ve earned an average of $5 million or less in annual revenue for the past three tax years.