๐๐๐ฆ ๐ฃ๐ฟ๐ผ ๐ง๐ถ๐ฝ: ๐ญ๐ฌ๐ต๐ต๐ ๐ณ๐ผ๐ฟ ๐ก๐ผ๐ป๐ฝ๐ฟ๐ผ๐ณ๐ถ๐๐
Introduction
Navigating 1099s can be a tricky process for nonprofits, especially with unique reporting requirements and varying contractor relationships. In this blog, weโll break down the essentials of 1099 forms for nonprofits, offering tips to ensure compliance, avoid common hurdles, and streamline your reporting process. Whether you’re new to handling 1099s or just need a refresher, this guide will help make tax season a little less daunting and keep your organization on the right track.
๐๐๐ฆ ๐ฃ๐ฟ๐ผ ๐ง๐ถ๐ฝ: ๐ญ๐ฌ๐ต๐ต๐ ๐ณ๐ผ๐ฟ ๐ก๐ผ๐ป๐ฝ๐ฟ๐ผ๐ณ๐ถ๐๐
Stay ahead of tax season with these essential steps for handling 1099s:
๐๐๐๐๐ฒ ๐ญ๐ฌ๐ต๐ต๐ ๐๐ผ๐ฟ๐ฟ๐ฒ๐ฐ๐๐น๐
Nonprofits must issue 1099-NEC for contractor payments totaling $600+ and 1099-MISC for other qualifying payments (e.g., rent, prizes, attorney fees). Proper classification is crucial to avoid IRS penalties.
BCS Insight: Review payment records early to identify vendors who meet the $600 threshold and prepare accordingly.
๐๐ผ๐น๐น๐ฒ๐ฐ๐ ๐ช-๐ต๐ ๐๐ฎ๐ฟ๐น๐
Ensure each contractor or vendor has a completed W-9 on file before making payments.
BCS Tip: Make it a standard practice to collect W-9s during onboarding to prevent year-end data scrambles.
๐๐ฑ๐ต๐ฒ๐ฟ๐ฒ ๐๐ผ ๐๐ถ๐น๐ถ๐ป๐ด ๐๐ฒ๐ฎ๐ฑ๐น๐ถ๐ป๐ฒ๐
The IRS deadline for issuing 1099s to recipients and filing them is January 31. Missing this date can result in fines and disrupt compliance.
BCS Tip: Schedule a December review of your records to confirm all data is accurate and ready for timely submission.
๐๐ถ๐น๐ฒ ๐๐น๐ฒ๐ฐ๐๐ฟ๐ผ๐ป๐ถ๐ฐ๐ฎ๐น๐น๐ ๐ณ๐ผ๐ฟ ๐๐ณ๐ณ๐ถ๐ฐ๐ถ๐ฒ๐ป๐ฐ๐
Filing electronically is faster, more accurate, and provides immediate confirmation that the IRS has received your forms, reducing the risk of delays.
BCS Tip: Embrace e-filing to streamline the process and minimize the risk of errors associated with paper submissions.
๐๐๐ผ๐ถ๐ฑ ๐ฃ๐ฒ๐ป๐ฎ๐น๐๐ถ๐ฒ๐ ๐ณ๐ผ๐ฟ ๐๐ฎ๐๐ฒ ๐ผ๐ฟ ๐๐ป๐ฐ๐ผ๐ฟ๐ฟ๐ฒ๐ฐ๐ ๐๐ถ๐น๐ถ๐ป๐ด๐
Errors or late submissions can incur penalties of $50 to $290 per form, depending on how overdue the filing is and the size of your nonprofit.
BCS Tip: Double-check all form detailsโnames, addresses, TINsโto ensure everything is accurate before submission.
Putting this altogether
Nonprofits should adopt best practices in financial management and transparency, such as following Generally Accepted Accounting Principles (GAAP) and engaging in regular audits. Implementing these practices ensures that the organization’s financial practices meet high standards of accuracy and reliability.
Need expert guidance? BCS is here to support your nonprofitโs financial reporting needs!
About the Author
Yara N. Ortiz is the Founder and CEO of BCS, a firm dedicated exclusively to serving nonprofit organizations with expert financial management and consulting services. With extensive experience in the nonprofit sector, Yara is passionate about helping organizations achieve their missions through strategic financial practices and a commitment to transparency.
For more information on how BCS can assist your nonprofit in managing restricted and unrestricted funds, feel free to contact us. Let’s work together to ensure your organization’s financial health and success.
