Does your business hire independent contractors or service providers? If so, then you will probably have to fill out a 1099 form during January.
First off, what the heck is a 1099?!
This form is used for reporting payments to independent workers. Note that this does NOT apply to regular employees. (For employees, you would fill out a W-2 form).
What classifies as an independent worker?
These workers are either self-employed or are independent contractors you’ve hired from service firms. Some common independent employees are: graphic designers, web developers, cleaning services, writers, landscapers, social media moderators, etc. Would they consider you their boss? If not, they are probably an independent worker.
What if I only paid an independent worker a small sum of money?
You are only required to complete a 1099 form if that independent worker was paid $600 or more. Note that, however, there are exceptions to this rule and you’ll want to consult the 1099 form instructions for further details. Exceptions may include payments made to attorneys or sales of consumers goods for resale.
When do I have to have my 1099 forms in by?
The deadline for giving out 1099 forms to your independent workers is January 31, 2014. The form must be in the mail by that time. Make sure to check with your employees beforehand to ensure you have the correct mailing address.
The deadline for filing 1099 information with the IRS is February 28, 2014 if you file by paper. Should you decide to file electronically, the date is extended to March 31, 2014.
You will also want to consult the 1099 form instructions for details pertaining to filing the 1099 forms with the state in addition to filing them with the IRS.
How do I file a 1099 form?
- You can file it on your own, and send it yourself to independent workers and the IRS.
- You can pay a filing service to handle everything.
- You can have a tax preparer or CPA handle everything.
What if I make an error on a 1099 form?
If it is brought to your attention that an error has been made on a worker’s 1099 form, simply re-issue a corrected form to that worker and correct the filing with the IRS. According to the IRS, if you are unable to fix the error, attach an explanation to your tax return and report your income correctly.
What happens if I don’t fill out and send in a 1099 form?
If you fail to issue a 1099 form, you will receive a penalty where you will have to pay a fine. The fee will vary depending on how long past the deadline you’ve gone.
Make sure you file your 1099 tax forms before it’s too late! Make it easy on yourself — all you need is an IRS-approved kit, including forms, envelopes and software.
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