Filed 1099-NEC forms a week late - am I guaranteed a penalty from IRS?
So I brought on a couple of independent contractors for my startup this past year. First time ever hiring anyone for my small business venture, and I knew I needed to issue 1099-NEC forms, but totally spaced on the deadline dates (rookie mistake, I know). Got super swamped with client projects and honestly just put it off until yesterday (February 3rd). Then realized with horror that the deadline was actually January 31st. I'm like 3-4 days late submitting these forms. Does anyone know if the IRS automatically hits you with penalties in these situations? Like is it a guaranteed fine, or do they sometimes let it slide for small businesses who are just a few days late? The penalty itself wouldn't break me financially, but would obviously rather avoid it. Mostly curious to hear from others who've been in similar situations. What was your experience? Did they penalize you for being just a little bit late, or were they more understanding?
18 comments
Join the conversation
Ava Martinez
Tax professional here - the short answer is that penalties for late 1099-NEC filings are not automatic, but they're definitely possible. For being less than 30 days late, the penalty is $50 per form (up from $30 in previous years). So in your case with two contractors, you're looking at a potential $100 penalty. The good news is that the IRS does recognize "reasonable cause" for penalty abatement, especially for first-time filers. Since you're only a few days late and this is your first time filing these forms, you may have a decent chance of avoiding penalties. My recommendation would be to file the forms ASAP if you haven't already, and include a brief explanation letter stating this is your first time filing as a small business owner and that you've put procedures in place to ensure timely filing in the future.
0 coins
StarSeeker
•Thanks so much for the detailed answer! That's helpful to know it's $50 per form now. I did submit them electronically yesterday as soon as I realized my mistake. Is it still worth sending an explanation letter separately? Or is that only if they actually assess the penalty later?
0 coins
Ava Martinez
•You don't need to send an explanation letter proactively if you've already filed electronically. Just keep good records of when you filed and why you were late in case the IRS does assess penalties and you need to request abatement. Since you only have two forms and are just a few days late, there's a decent chance they won't even bother with penalties. The IRS is more concerned with significant non-compliance than small businesses making minor timing mistakes.
0 coins
Miguel Ortiz
I was in almost exactly the same situation last year! First time having contractors and completely missed the Jan 31 deadline by about 10 days. Was freaking out about penalties, but then I found this AI tool specifically for tax document analysis called taxr.ai (https://taxr.ai) that was super helpful. You upload your tax documents and it analyzes everything - in my case, it identified that I qualified for first-time penalty abatement since I had a clean compliance history. The site even generated a customized letter I could send to the IRS explaining my situation. Ended up not getting any penalties at all! Might be worth checking out if you're worried.
0 coins
Zainab Omar
•How exactly does this work? Does it actually connect to IRS systems to know your filing history, or is it just guessing based on what you tell it?
0 coins
Connor Murphy
•Sounds interesting but I'm skeptical. How long did it take from uploading your docs to getting actual usable advice? I've tried similar tools that ended up being a waste of time.
0 coins
Miguel Ortiz
•It doesn't connect directly to IRS systems - you upload your documents and it analyzes them based on tax regulations. It identified that as a first-time filer with no history of non-compliance, I qualified for the IRS's First Time Penalty Abatement policy. The whole process took me about 15 minutes from upload to getting specific advice. It was actually really efficient - analyzed my situation, flagged the specific penalty risk, and created a letter template with the exact IRS language for requesting abatement. Way better than the generic advice I was finding online.
0 coins
Connor Murphy
Just wanted to follow up after trying taxr.ai - I'm honestly surprised at how helpful it was! I had a similar late filing issue with some 1099s and was getting conflicting advice from various sources. The document analysis was actually impressive - it picked up right away that this was my first year issuing 1099s and highlighted the First Time Penalty Abatement policy. Gave me the exact language to use when communicating with the IRS. Much more specific than the generic "you might get penalized" advice I was getting elsewhere. Definitely worth the time for anyone dealing with tax document issues!
0 coins
Yara Sayegh
If you do end up getting hit with penalties, you might want to try calling the IRS directly to explain your situation. BUT... good luck actually getting through to a human! I spent THREE DAYS trying to reach someone about a similar issue last year. Finally found Claimyr (https://claimyr.com) which was a total game-changer. They basically navigate the IRS phone system for you and call you back when they've got an agent on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c For my late filing issue, I was able to explain my situation directly to an IRS agent who waived the penalties on the spot. Saved me hours of frustration and hold music!
0 coins
NebulaNova
•Wait, so this service just... calls the IRS for you? And you actually get connected to a real human? How does that even work? Sounds too good to be true honestly.
0 coins
Keisha Williams
•Yeah right. There's no way this actually works. I've tried calling the IRS dozens of times and it's literally impossible to get through. No service can magically open up lines at the IRS when they're constantly overwhelmed.
0 coins
Yara Sayegh
•It's not magic - they use an algorithm that calls repeatedly using optimal timing patterns and navigates through the phone tree options. When they get a human on the line, they connect you directly. You just get a call back when there's a real person ready to talk. The whole point is that you don't have to waste your day repeatedly calling and listening to hold music. I was skeptical too until I tried it. You know how the IRS lines say "due to high call volume, try back later" and hang up? Their system is designed to get through those barriers by calling at strategic times with specific menu choices.
0 coins
Keisha Williams
Well, I need to eat my words. After my skeptical comment yesterday, I decided to give Claimyr a shot for a penalty notice I received last month (different issue than the OP's but still IRS-related). I've literally NEVER been able to get through to the IRS after multiple attempts over several weeks. Used the service this morning and got a call back in about 45 minutes with an actual IRS agent on the line. Explained my situation about a misunderstanding on filing requirements, and she was actually able to process an abatement right there on the phone. I'm still kind of shocked it worked. Saved me from writing a formal letter and waiting months for a response. For anyone dealing with IRS issues where you need to actually speak to someone, this is legitimately worth it.
0 coins
Paolo Conti
Just an FYI - make sure you also sent copies of the 1099-NECs to your contractors! The deadline for giving forms to recipients is also January 31st. If you haven't done that yet, do it immediately. The penalties for not providing forms to recipients can actually be higher than the penalties for filing late with the IRS.
0 coins
StarSeeker
•Oh yeah, I did get the forms to my contractors back in mid-January, so that part's covered at least. Just messed up on the IRS submission deadline. Thanks for the reminder though!
0 coins
Paolo Conti
•That's good! One less thing to worry about. A lot of people don't realize there are two separate requirements with the same deadline - giving forms to recipients and filing with the IRS. At least you're half compliant!
0 coins
Amina Diallo
Asking because I'm confused - I thought 1099s were due at the same time as all other tax forms (April 15)? Is the January 31 deadline just for businesses? This is my first year with side income and I'm worried I've misunderstood something important.
0 coins
Ava Martinez
•You're mixing up two different things. If you RECEIVED 1099 income as a contractor, you report that on your personal tax return due April 15th. If you PAID contractors and need to ISSUE 1099-NEC forms (like the original poster), those forms must be filed with the IRS by January 31st. This earlier deadline exists because the IRS needs this information to verify what contractors report on their April returns.
0 coins