What are the benefits of filing a 1099 electronically?

The most obvious benefit is that it is paperless and environmentally friendly. It is also secure and encrypted. It is easy to do by simply following our step-by-step guide. It is a fast process and avoids the need to wait for the IRS’s manual process. In addition, 1099 forms can often be emailed to vendors giving them immediate access.

What is “information reporting”?

Organizations are required to report certain “reportable” payments made in the course of their trade or business to the IRS.  This process is known as “Information reporting”.  There are over 30 information tax returns that are required to be submitted to the IRS.

This process allows the IRS to cross-check the income reported from these organization with the income reported on an individual and entity’s tax return.  This in turn helps increase the likelihood that all income received is reported and, therefore, that all tax is paid.  Some of the more common information tax returns are:

Form W-2 Wage and Tax Statement

Form 1099 (16) non-wage

  • Form 1099-MISC, Miscellaneous payments
  • Form 1099-INT, Interest income
  • Form 1099-DIV, Dividends & distributions
  • Form 1099-K, Merchant card & third-party network payments
  • Form 1099-B, Broker & barter transactions
  • Form 1099-G, Government payments

Form 1042-S – Payments to foreign persons

Form 1098 (5) – Mortgage interest, mortgage assistance payments, auto/boat/plane donation, student loan interest paid, tuition paid.

From 5498 (3) – IRA account info, HSAs, Coverdell Education Savings Accounts.

Do I have to mail a 1099 form to my vendor, or can I just email it to them?

If you are required to furnish a written 1099 statement (Copy B or an acceptable substitute) to a recipient, then you may furnish the statement electronically instead of on paper.  However, the recipient must consent in the affirmative to receiving the statement electronically and not have withdrawn the consent before the statement is furnished.

Applies to 1099-A, 1099-B, 1099-C, 1099-CAP, 1099-DIV, 1099-G, 1099-INT, 1099-K, 1099-LS, 1099-LTC, 1099-MISC, 1099-OID, 1099-PATR, 1099-Q, 1099-QA, 1099-R, 1099-S, 1099-SA, 1099-SB

The consent statement must include the following:

  • The scope and duration of the consent.
  • How to obtain a paper copy after giving consent.
  • How to withdraw the consent.
  • Notice of termination
  • Procedures to update the recipient’s information.
  • A description of the hardware and software required