1099-MISC Forms For Independent Contractors

As the New Year begins, you're probably not thinking about taxes at all. This is a mistake as deadlines are approaching for issuing and filing 1099s to independent contractors.

What is a 1099-MISC for independent contractors? 

In general, the IRS requires you to report certain payments you made throughout the year to independent contractors.  The 1099-MISC form is a single page on which you report the total amount you paid to the independent contractor for the whole year. 

The 1099-MISC forms must be issued to any individual you paid at least $600 in rents, services or other income payments.  For instance, if you hired a contractor to renovate a room in your home and paid them $6,000, a 1099-MISC filing would be required.  As with virtually any IRS filing, there are other situations that require a 1099 filing.  Any payments to attorneys has to be reported in spite of the amount.  Royalties that total over $10 must be reported too.  Typically, you don't need to report payments to a corporation. 

When and What Should Be Filed? 

The 1099 MISC form is a multi-layered carbon form, so ensure the information you provide is clear and readable on all of the copies.  When you finish filling out the 1099 misc form, provide Copy B to the person you're reporting to the IRS by January 31. 

Copy A of the 1099-MISC form is intended for the IRS.  You must file it by February 28, if you are sending the form by mail.  If instead you file it electronically, then you have to submit it by March 31. 

The IRS has made a big effort to cut down on red tape, but you'll still find it with 1099-MISC filings.  Besides filing the 1099 with the IRS, you must also file a 1096 form.  The 1096 form is the "Annual Summary and Transmittal of U.S. Information Returns" form.  It is one page and extremely easy to fill out. 

Even though the IRS has a great web location, you cannot download 1099 forms off of it.  The official forms are still multi-layered carbon paper, so you have to get a physical copy.  The IRS should send you the forms in the mail.  If they don't, you can order them off the IRS site or call the IRS to have them sent to you.  If all else fails, you can typically find the forms at big post office and public library places.  If you fail to file 1099s, the IRS will penalize you $50 per 1099. 

Some people have grumbled about filling out 1099s so early in the year, but doing so has indirect benefits.  You are forced to start arranging your records for the year.