Once again, the tax season is upon us. As responsible businessmen, we have to be ready for filing our annual taxes and the other forms that we need to fill in. One of the forms that are commonly prepared by employers is the 1099-MISC.
WHAT IS A 1099-MISC?
It is a form that reports the total amount of payments an independent contractor receives from an entity or the employer that he provides services to. The independent contractor’s personal information such as name, address, and either Social Security number or employer identification number (EIN) is indicated. The IRS requires a company or a person that makes certain types of payments to report these on a 1099-MISC to them and its recipient. It covers a wide range of payments such as rent, royalties, and substitute payment in lieu of dividends. Most commonly, it is used to report the earnings of an independent contractor under nonemployee compensation.
WHO IS RESPONSIBLE FOR PREPARING A 1099-MISC?
The employer who hires the independent contractor is the one responsible for preparing the 1099-MISC. He should be able to prepare a form for each independent contractor he hired if he paid $600 or more during the year. The employer must furnish the independent contractor a copy by January 31 of each year.
WHAT TO DO WITH A 1099-MISC?
Upon receiving a 1099-MISC, an independent contractor must report his income on his individual tax return (Form 1040).
You may want to talk to an Enrolled Agent if you need help to ascertain on what other forms you need to fill in and file.
That’s it! Now you are more equipped with 1099-MISC facts. Be sure not to miss filling this in for your independent contractors!
If you need additional information about 1099-MISC reporting, contact us today at admin@fas-accountingsolutions.com or 832-437-0385.
