Just recently, the IRS opened up new portal to e-file 1099 forms for free. This is available for both individuals and small businesses and will likely cause big changes in the way many people file for their taxes. On the surface, this new portal might seem really simple, but there are still some things you should be aware of before you begin using it. In this article, we will take a look at how this new portal works specifically for small businesses and how exactly they can use it for their advantage.
Why should small businesses start using this new portal?
In order for a change to be positive, it is necessary that there is a decent amount of understanding beforehand. Most small businesses already have their own systems in place when it comes to filing 1099 forms. Suddenly switching to this new portal might seem somewhat abrupt, but the IRS is certain that this change will be a positive one for all small businesses. Here is the direct statement the IRS made on the official government website:
“The IRS is excited to offer any business, especially small companies, a great new way to electronically file their 1099s for free,” said IRS Acting Commissioner Doug O’Donnell. “This simplifies filing for those issuing 1099s and helps recipients receive information timely. The launch of IRIS can help reduce the millions of paper Forms 1099 we project will be filed in 2023 and demonstrates our commitment to finding useful and innovative ways of reducing paperwork on the business community and others issuing 1099s. This is part of the larger effort underway to make improvements and transform operations at the IRS.”
Just by going off of this statement, it’s clear that this portal was designed with small businesses in mind. Since the start of the pandemic, more and more people prefer to do things virtually or paper free. This change in society caused many small businesses to take a hit, as it was easier for many people to use various online services. Businesses that were unable to adapt to this may have had difficulty keeping clients or gaining any new ones. This new portal should make it possible for many more businesses to file 1099s online without the need for paper.
What can you do with this new portal?
Businesses (and individuals) that use this new portal are able to create, upload, edit, and view information as well as download completed copies of 1099 forms. These can then be used for distribution as well as verification. Businesses specifically are able to e-file both small and large volumes of 1099-series forms.
What forms do the IRS currently accept?
The IRS states that you can file any 1099 form with their new portal. This includes the following:
Form 1099-A, Acquisition or Abandonment of Secured Property
Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
Form 1099-C, Cancellation of Debt
Form 1099-CAP, Changes in Corporate Control and Capital Structure
Form 1099-DIV, Dividends and Distributions
Form 1099-G, Certain Government Payments
Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments
Form 1099-INT, Interest Income
Form 1099-K, Payment Card and Third-Party Network Transactions
Form 1099-LS, Reportable Life Insurance Sale
Form 1099-LTC, Long-Term Care and Accelerated Death Benefits
Form 1099-MISC, Miscellaneous Information
Form 1099-NEC, Nonemployee Compensation
Form 1099-OID, Original Issue Discount
Form 1099-PATR, Taxable Distributions Received from Cooperatives
Form 1099-Q, Payments from Qualified Education Programs (Under Section 529 and 530)
Form 1099-QA, Distributions from ABLE Accounts
Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Form 1099-S, Proceeds from Real Estate Transactions
Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
Form 1099-SB, Seller’s Investment in Life Insurance Contract
Keep in mind that they currently only accept 1099 forms for tax year 2022 and later.
How does it work?
In order to use the new portal (IRIS), you must sign up with the application from the IRS website. After doing so, you can sign into the portal from which you can access your 1099 forms or file a new one. The IRS uses ID.me for their sign in options, so if you don’t have an IRS account you can use that.