I started a painting business last year and used subcontractors for all my labor. I paid about $130k in total, and I have W9s for some of them (around $65k), but I couldn’t get the rest of the info for another $65k in wages. How much trouble am I in come tax time if I can’t report that $65k?
You’re only in trouble if you get audited, but the fine can be up to $330 per missed 1099. Just make sure next time you get a W-9 before paying them. They’ll provide the W-9 if they want to be paid.
Dev said:
You’re only in trouble if you get audited, but the fine can be up to $330 per missed 1099. Just make sure next time you get a W-9 before paying them. They’ll provide the W-9 if they want to be paid.
Okay, that’s not as bad as I thought. Looks like it could be around $4000 in fines.
You should call or write to the subcontractors and tell them they need to provide their information to avoid filing incomplete 1099s, which could attract IRS attention.
Vann said:
You should call or write to the subcontractors and tell them they need to provide their information to avoid filing incomplete 1099s, which could attract IRS attention.
Definitely request it in writing. But you should also try calling them or talking to them in person.
Are any of them LLCs? Some states have EINs listed on their Secretary of State website.
Jesse said:
Are any of them LLCs? Some states have EINs listed on their Secretary of State website.
I have most of their LLC names and addresses.
Jesse said:
Are any of them LLCs? Some states have EINs listed on their Secretary of State website.
I have most of their LLC names and addresses.
What state are you in?
@Jesse
I’m in Colorado.
Zariah said:
@Jesse
I’m in Colorado.
Check the Colorado Secretary of State business entity search. They should have that information.
Just another thing to keep in mind when working with subcontractors: if you have workers’ comp, make sure you get a copy of their certificate of insurance showing they have it. If they don’t, you might have to pay the workers’ comp premium for the amount you paid them and under their class code.
File the 1099s even if you can’t get the TINs. The IRS has guidelines for situations like this.
Here’s a helpful article, although it’s not from the IRS:
When you fill out the Form 1099-NEC, write ‘refused’ in the TIN box if you didn’t get their number. Also, remember to request the TIN in writing.