November 20, 2012
Your dental practice, like all businesses, is required to file Form 1099-MISC for each independent contractor or vendor that has been paid at least $600 during a calendar year. It is important to file these forms to avoid costly audits and fines by the government.
Refer to the following charts regarding when to file Form 1099-MISC.
|Items that need to be reported on Form 1099-MISC||For example:|
|Rent for office space (except if paid to a realtor)||A landlord or building management company|
|Services||Labor and repairs to equipment, computers, etc.|
|Payment to independent contractors||Non-employees (i.e. a CPA firm for accounting services)|
|Medical/healthcare payments||Providers and insurers of medical and healthcare services even if it is a corporation|
|Payments for legal services||Attorneys even if it is a corporation|
|Items that do NOT need to be reported on Form 1099-MISC||For example:|
|Payments to corporations||Corporations with the exception of attorneys, medical and healthcare services, and CPA firms|
|Merchandise||Equipment, instruments and disposable supplies|
|Utility companies||Water, waste disposal, phone, internet, etc.|
|Storage||Storage unit, records storage, etc.|
|Wages to employees (however you must file Form W-2 for each employee)||Dentist employees, hygienists, assistants, office staff, etc.|
Generating 1099-MISC forms can be time consuming, however, they are a mandatory component of owning a business. To increase efficiency, it is a good practice to request the tax identification number of vendors throughout the year, prior to payment, so that the information needed to prepare the forms is already in your system. Form 1099-MISC is due to the recipient by Jan. 31, and due to the IRS by the last day of February. To ensure the accuracy of reporting to the IRS, mail the forms first to your 1099 candidates prior to the Jan. 31 deadline. This will allow for any issues or mistakes to be resolved prior to the IRS deadline in February.
The guidelines for Form 1099-MISC can be very confusing. To protect yourself from being audited and/or fined, follow this good rule of thumb: when in doubt, send one out. Submitting this form, even unnecessarily, will not hurt anything – in fact, it may save you substantial penalties.
Penalties for delayed filing or failure to file can be severe.
- $30 per information return (1099-MISC) if you correctly file within 30 days of the due date; maximum penalty of $75,000 per year.
- $60 per information return if you correctly file more than 30 days after the due date but no later than Aug. 1; maximum penalty of $200,000 per year.
- $100 per information return if you correctly file after Aug. 1 or if you do not file the required returns; maximum penalty of $500,000 per year.