Business Tax Warning: Not Filing Form 1099 May Result in No Tax Deduction
Businesses must issue employees a W-2 and independent contractors Form 1099-Misc. However, many of us are not aware of some of the consequences of not filing a Form 1099-Misc.
Failure to file a Form 1099-Misc may subject you to a $50-530 failure to file penalty depending on how late it is filed.
Even Worse: California may disallow a deduction for personal services if no W-2 or 1099 was filed! California auditors do take advantage of this law. This can lead to a big donut hole (i.e. zero tax deduction).
IRS auditors don’t have the authority to do this but many auditors try to use this tactic as well.
For assistance in filing Form 1099, contact Richard Pon CPA today.
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