E-filing, unlike paper filing, is faster and more convenient option for filing informational returns. If you are still relying on paper filing, you are at a disadvantage. By shifting to e-filing and using a 1099 filing software, you can securely transmit the informational return to the IRS and with the IRS 10-return e-file mandate, it becomes necessary to e-file.
In this blog, we’ll take a look at why e-filing matters and explore how the best 1099 filing software 2025 can make your e-filing experience more seamless and convenient.
Why does a Specialized 1099 Filing Software Matter?
Even though the IRS offers its own e-filing service (FIRE and IRIS system), its systems do not come equipped with any other feature that makes e-filing informational returns simple and hassle-free. That’s where 1099 filing software comes in.
IRS “matching” & penalty exposure
Anytime you submit a 1099 form to the IRS, they compare what was reported in the form with what recipients file in their own individual returns. This “matching” means that even a single discrepancy can trigger a notice, penalties, or backup withholding. Add to this the IRS’s penalty for late filing or missing forms, which ranges from $60 to $660 per return. By using a 1099 e-file platform, you can validate recipient TINs before filing and avoid costly penalties.
10-return e-file mandate
The importance of tax filing software has only grown under the new 10-return e-file mandate. For filings in 2025, if you, the payer, is filing for more than 10 forms, you need to e-file. Paper filing is no longer an option. This means even small businesses that previously handled reporting manually are now required to shift to e-filing.
Automated Filing vs. Manual Spreadsheets
Relying on manual spreadsheets for large bulk filings increases the risk of duplicate entries and typos in the forms. And increased errors lead to penalties and notices. With e-filing, you can automate the filing process using a variety of tools like real-time TIN matching, bulk file uploads, etc., filing informational returns becomes more efficient and reduces the time needed for corrections.
Core Features of 1099 E-Filing Software Every Payer Needs
When choosing a 1099 tax filing software, you need a software that delivers the following functionalities.
Data On-Ramp
Seamless data upload is must-have feature for a1099 e-file platform. Importing data into the software from multiple sources such as CSV or Excel files, accounting platforms like QuickBooks and Xero, and APIs (REST/SFTP) helps reduce manual data entry errors. It also keeps the general ledger and 1099 database in sync.
Compliance Automation
Using 1099 compliance tools make it easier to remain compliant with IRS reporting rules. These tools come equipped with real-time TIN match, USPS address validation, and duplicate-payee detection which reduces the chances of receiving CP2100 notices and avoids backup withholding processes.
Multi-Form & State Coverage
Some states have different reporting rules you need to keep in mind. By using 1099 e-filing platform that supports federal as well as auto upload CF/SF, you can file multiple types of 1099 forms like 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-R, etc., in one single platform and still remain compliant in all 50 state jurisdictions.
Security & Audit Trail
Unlike paper filing which opens itself up to security issues, e-filing platforms can help you stay compliant by safeguarding sensitive taxpayer information. This is done by using SOC 2 Type II certification, AES-256 encryption, multi-factor authentication, role-based access control, and maintenance of an audit trail.
Recipient Delivery
Distributing recipient copies manually is a time-consuming job. By using an e-filing platform that comes with an in-built delivery option, you can request consent from recipients, print and mail, plus track form delivery in one place.
Support & Scalability
Most e-filing platforms are scalable which means you can grow with it without having to switch platforms. You can handle multiple bulk filings using a single dashboard. They also offer volume-based pricing for large filings as well as provides you access to 24/7 technical support via chat and phone.
A Side-by-Side Comparison of the Top 7 E-filing Platforms
| Provider | Best For | Stand out Features | Forms Covered | Price |
|---|---|---|---|---|
| 1099Online | SMBs | -Bulk Import & Upload -TIN Match -Free Tech Support -Tax Practitioner |
1099 Forms | Tired Pricing, Starting at as low as $0.69 per form |
| Tax1099 | SMBs & Large Enterprises | -Real-Time TIN Match -eDelivery Portal -USPS Address Validation -W-9/W-8 eSolicitation -50 States filing -API Integration |
1099 Forms, 94X Forms, ACA Forms, W-2 Forms, Payroll Forms, 1042 Forms, etc | -First 20 Forms: $2.99 -21 to 150 Forms: $2.30 -151 to 500 Forms: $1.31 -501 to 1000 Forms: $0.68 |
| Avalara 1099 & W9 (Formerly Track1099) | QB/Xero users | -QuickBooks sync -B-Notice tracker -Secure e-delivery -State e-file |
1042 Forms, 1099 Forms, W-2 Forms | -First 15 forms: $3.10 -Next 150 forms: $2.30 -166-500 Forms: $1.30 -501+ Forms: $0.63 each |
| TaxBandits | Accounting firms | -Multi-client dashboard -Correction wizard -W-9 Manager -CSV Upload -Filing Summary Report |
94x Forms, 1099 Forms, W2 Forms, ACA Forms, 1042 Forms, etc. | Starting at $2.75/form |
| Yearli | Growing payers | -Same-day print-mail -Integration with accounting platforms |
W-2, 1099, 1095 (ACA) | Starting at $6.29 |
| 1099 Pro | Enterprises | -Professional & Enterprise Software -Cloud Solutions |
1042-S, 1095, 1099, W-2 | Starting at $389 |
| FileYourTaxes.Com | Legacy filers | -25-yr IRS transmitter -Tutorials -Secure Storage |
W2, 1099, 1098 Series | Starting at $55 |
Feature Deep-Dive: TIN Matching & Backup Withholding
Here’s how automated TIN Matching and Backup Withholding work in IRS-informed compliance workflows.
- Before making the first payment, the IRS requires you to collect a valid Form W-9 from the recipient which would be used for 1099 reporting.
- Once the data is collected, use a TIN check software to verify name and TIN with the IRS database. Most e-filing software have automated TIN matching services that verify the data in real-time.
- If the TIN match result shows that all the TINs are valid, you can proceed to filing and payments. For results that do not match with the IRS database, you’d need to start 24% backup withholding process.
- If a bad TIN manages to slip through, the IRS will send a CP2100 B-Notice to notify you of the incorrect TIN and you’ll need to request for an update W-9 from the recipient.
- After the valid TIN is obtained, you can file a ‘CORRECTED’ 1099 to stop the backup withholding process. The recipient can later claim credit for those withheld taxes on their return.
Tip: Always validate TINs before year-end or ideally during onboarding.
Real-Life Scenarios
Scenario 1: A payer issued twelve 1099-NEC forms and three 1099-MISC forms
In this case, the payer must e-file all the fifteen returns using a 1099 tax filing software. Most platforms also offer an auto-aggregate form counter that keeps track of all your returns across different 1099 types.
Scenario 2: A vendor’s TIN failed the verification process
If a vendor’s TIN failed to match IRS records, you need to start the 24% backup withholding process. Using a real-time IRS TIN match before filing a 1099 form can protect the payer and payee from penalties and notices.
Scenario 3: A bank pays interest to 500 different accounts located across 15 states
Instead of filing separately for each state, you can upload all the data in single upload to an e-filing platform that supports CF/SF to IRS + state filing. Usually, in this case, the platform will forward the forms to the state agencies automatically.
Scenario 4: The vendor’s address changed mid-year
In this case, you can always update the records to avoid rejected filings. Better yet, use a platform that offers a secure recipient self-service portal that allows vendors to update their own details online.
Scenario 5: Discovered an error in payment amount on a 1099 form in August
If you realized the payment amount reported was incorrect months after filing, then you’d need to correct the information by filing a “CORRECTED” copy of that specific 1099 form within 30 days. You can use a built-in correction workflow to guide you step by step.
FAQs
1. Does a payer still need software if issuing fewer than 10 forms?
Ans: Manual paper filing is allowed for fewer than 10 forms. But it is highly recommended to use an e-file software to reduce the risk of penalties and errors.
2. Can a payer file multiple EINs under one account?
Ans: Yes, a payer can upload multiple EINs under one account if they use an IRS-approved 1099 e-filing platform that supports bulk uploads.
3. Is IRS approval of a transmitter an endorsement?
Ans: No, IRS authorization confirms only that the transmitter has the technical capability to e-file. You must do your own due diligence when selecting the e-filing software.
4. How long must digital copies be retained?
Ans: Digital copies of tax forms and other tax filing-related documents must be kept securely for a minimum of three to four years.
5. What if the IRS rejects a file?
Ans: If the IRS rejects a form, you can correct and resubmit within 30 days to avoid escalated penalties using an e-filing software that allows automatic resubmission of filings.
6. Does 1099Online software handle Form 8809 extensions?
Ans: Yes, 1099Online supports Form 8809 (request for extension) where you can easily get a 30-day automatic filing extension.