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Review important requirements for employee filing.
Understand Your 1099 State Reporting Requirements
1. Your state participates in the Combined Federal/State Filing (CF/SF) program.
Most states participate in this program, which is a major convenience for employers. Under this program, the IRS shares 1099* data with the appropriate states — automatically. That way, you’re saved the extra step of state filing.
These are the states that participate in the CF/SF program: AL, AR, AZ, CA, CO, CT, DE, GA, HI, ID, IN, KS, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NJ, NM, NC, ND, OH, OK, SC, WI.
NOTE: Participation does not mean that the state may not still require you to file directly.
Please verify the requirements directly with the Department of Revenue for the state in question. Click Here
2. Your state doesn’t participate in the CF/SF program, so you must file directly.
If a state isn’t part of the combined program and the state requires you to submit the form, then it’s your responsibility to file the 1099-MISC directly with that state. It’s two separate returns and two separate processes.
These states require direct filing: IA, Il, KY, NY, OR, PA, RI, UT, VA, WV, VT, DC.
3. Your state doesn’t have a state income tax, so you only have to file federal returns:
If you’re an employer filing in one of these states, you’re required to report 1099* data with the federal government only.
These states are: AK, FL, NV, NH, SD, TN, TX, WA, WY.
*This information refers to these forms that are available for e-filing:
Protect Your Business from Hefty Filing Penalties
It pays to mind the tax-filing deadlines, too. Late filing of mandatory 1099s could lead to penalties ranging from $50 to $100 per 1099, with a maximum of $547,000 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 $191,000
- $100 per 1099, if you file more than 30 days after the due date but by August 1; maximum penalty of $547,000
- $270 per 1099, if you file after August 1; maximum penalty of $1,091,500
Penalties for not filing correct information returns apply if you:
- Don’t file a correct information return by the due date and a reasonable cause isn’t given
- File on paper if you’re required to file electronically
- Don’t report a Taxpayer Identification Number (TIN)
- Report an incorrect TIN
- Don’t file paper forms that are machine-readable
Penalties for not furnishing correct payee statements apply if you:
- Don’t provide a correct payee copy by the due date and a reasonable cause isn’t given
- Don’t show all required information on the statement
- Provide incorrect information on the statement
Keep in mind that the penalty to file a correct information return is separate from the penalty for not furnishing the correct payee statement. Because of this, you could incur two separate penalties.
*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.