Form 1099 is a tax form used to report several kinds of income. There are many types of compensation, and businesses must report to the IRS the payments they made to individual taxpayers. If you are a business owner, you might have paid non-employee compensation during the taxable year. The IRS looks into the Form 1099-MISC to determine the tax liability of the individual taxpayer.
Form 1099-MISC is used to report payments made to independent contractors during the calendar year. They are usually a non-employee doing work for your business. Consequently, you will not pay for their payroll taxes.
In general Form 1099-MISC is filed for each person to whom the business has paid one or more of the following:
- At least $10 in royalties.
- Gross proceeds to an attorney.
Additionally, if you made payments of at least $600, you would be required to file Form 1099-MISC to your contractor. When you report the payments made for independent contractors, you will need a W-9 form. This form ensures the correctness of information about your contractors’ name, address, and tax ID number. It is not necessary to send Form W-9 to the IRS; however, you will need the completed and signed W-9 to issue 1099.
As a small business owner, you will also receive a Form 1099-MISC if you provide services to another business. You must report all amounts reported on your Form 1099-MISC as part of your gross income.
Upon receiving your Form 1099-MISC, you must check if the stated amount and information are correct. If you notice a mistake on the Form 1099-MISC you received, you should immediately take action to get it corrected. You must notify the business that issued Form 1099 before the deadline. Contact the issuer to give you a corrected one. If the issuer does not cooperate, you must address the problem yourself.
Take note of the different copies of your Form 1099-MISC and where to send it.
A physical form of copy A must be obtained, filled up, and mailed to the IRS. It is usually easier to file Forms 1099 electronically; you can use third-party service.
If you need assistance with your 1099-MISC, let our Enrolled Agent help you! Contact us today at admin@fas-accountingsolutions.com or 832-437-0385.
