The 1099 deadline is close and you are missing W-9s

It is January. You have a list of subcontractors, a list of payments, and somewhere between two and twenty people you paid without ever getting a W-9.

The deadline for 1099-NEC is January 31 — to the recipient and to the IRS, which is unusual and catches people out. Unlike some other information returns there is no later date for the government copy.

Here is the order that gets you through it.

Work out who actually needs one

Start from payments, not from memory. Pull every payee you paid during the year for services and work through this filter:

• Was it for services, in the course of your business? Payments for goods alone generally do not need a 1099-NEC. A sub who supplied both labour and material usually does.
• Did the total for the year cross the reporting threshold? Thresholds are set by statute, have changed recently, and are being indexed going forward — check the figure in the current year's instructions rather than working from the number you remember.
• Are they a corporation? Payments to most corporations are excluded, with specific exceptions — attorneys being the well-known one. The W-9 tells you which they are, which is exactly why you need it.
• How did you pay them? Payments made by credit card or through certain third-party networks are reported by the processor instead, and you should not report them again. Double reporting a sub is a good way to get a very annoyed phone call.

This is also why totals by payee matter more than a lump "subcontractors" figure. If your books have one big number, this step alone is a day's work.

Chase the missing W-9s today

Every day of delay makes this harder, because the people hardest to reach in January are exactly the ones who did one job in June.

Send Form W-9 itself, not a request in the body of an email. Attach the blank form, say what you need and by when, and say why — most subs understand that a missing tax ID is a problem for both of you.

If someone will not provide it, that is a specific situation with a specific answer: the rules require backup withholding on future payments to a payee who has not furnished a taxpayer identification number. That is the mechanism, and it is worth understanding before the next season rather than during it. Talk to your CPA about applying it correctly.

File, even if it is not perfect

Two things people do wrong under deadline pressure, both of which make it worse:

Not filing because information is missing. Penalties for filing late generally escalate the longer you wait, and the largest tier is reserved for intentional disregard. Filing what you have on time, and correcting afterwards, is almost always better than filing nothing.

Guessing at a taxpayer ID. Do not. A wrong TIN generates a mismatch notice, which starts its own process with its own obligations, and it is worse than a form filed with the information genuinely unavailable. If you cannot get the number, take advice on how to proceed rather than inventing one.

Corrections exist and are routine. File a corrected form when the real information arrives.

If you have already missed it

File now. The penalty structure is tiered by how late the filing is, so the difference between filing in February and filing in May is real money. Do not let a missed deadline turn into a skipped year — an unfiled year sits there indefinitely, and it surfaces at the worst possible moment, which is usually a loan application or a sale.

Then check the same thing for the prior year while you are in there. If this year went wrong, last year very likely did too.

The fix is in March, not January

Every painful January traces to the same decision made ten months earlier: someone got paid before they handed over a W-9.

The rule that eliminates this entirely is one line long, and it is operational rather than accounting:

No W-9, no first cheque.

Alongside it, three habits:

1. Track subcontractor payments by payee all year, not as one lump account. The 1099 list should be a report you run, not a list you build.
2. Collect a certificate of insurance at the same time as the W-9. You need it anyway for the workers comp audit, and asking for two documents once is easier than asking for one document twice.
3. Review the payee list in November. Anyone approaching the threshold with no W-9 on file gets chased while they are still working for you and still answering the phone.

Contractors who adopt the first rule describe the following January as uneventful, which is the entire goal.

Related

• 1099 or W-2? Classifying the people who work for you
• Surviving your workers comp audit
• 1099 vs W-2 cost calculator

This is general information about information reporting, not tax advice. Thresholds, penalty amounts, backup withholding rates and filing requirements change — several have changed recently. Confirm the current figures in the year's official instructions and take advice from a CPA or enrolled agent.