Sometimes, you need someone outside of your company to help you complete certain tasks. Or, you need work done that requires a special skill. One way to accomplish these tasks is to hire an independent contractor.
Did you hire an independent contractor to do work for your small business this year? If you did, you need to file Form 1099-MISC for the contractor. What is Form 1099-MISC?
What is Form 1099-MISC?
Form 1099-MISC is a type of information return. The IRS requires you to fill out Form 1099-MISC for certain types of payments. Form 1099-MISC shows miscellaneous income, such as payments to non-employees for services performed. If you paid a contractor to do work for your business, you need to fill out Form 1099-MISC.
Reporting contractor payments
One of the most common small business uses of IRS Form 1099-MISC is to show a payment to an independent contractor. Much like how you would send a Form W-2 to an employee, you send Form 1099-MISC to independent contractors that you paid during the previous year. If you paid a contractor $600 or more during the year, you need to file a Form 1099-MISC.
When you hire an independent contractor, you should have them fill out Form W-9. Keep the Form W-9 with your records. Use the contractor’s Form W-9 to fill out Form 1099-MISC.
You will include the following information on Form 1099:
- The contractor’s legal name
- The contractor’s address
- The contractor’s Social Security number or Employer Identification Number (EIN)
You will also include the amount of money you paid the contractor on Form 1099-MISC. Check your accounting records to see exactly how much you paid each contractor.
You must classify the type of payment as well as the reason for the payment. Often, you report the contractor’s payment as nonemployee compensation.
Form 1099 due date
A 1099-MISC FAQ is, “When is the form due?” Form 1099-MISC is due to the independent contractor and the IRS by January 31.
This due date is only for nonemployee compensation. If you are using Form 1099-MISC to report a different payment, the paper Form 1099-MISC is due to the IRS by February 28 or the electronic form is due by March 31.
No matter what kind of compensation you use Form 1099-MISC for, you must also send in the summary form, Form 1096, with the 1099 by the same due date.
Other uses of Form 1099-MISC
The IRS lists many uses of Form 1099-MISC other than contractor payments. There are many payments not made to independent contractors that may require Form 1099-MISC.
Check the IRS Form 1099 instructions for a list of payments that should be reported on Form 1099. For example, you might use Form 1099-MISC to report attorney fees you paid.
Form 1099-MISC copies
Form 1099-MISC consists of several copies. Each copy will go to the contractor, the IRS, or you. Here is where you should send each copy of Form 1099-MISC:
- Copy A: You send this copy to the IRS, along with Form 1096, the Annual Summary and Transmittal of U.S. Information Returns. Form 1096 is a summary of all the Forms 1099-MISC you filed.
- Copy 1: You send this copy to the state tax department, if applicable.
- Copy B: You send this copy to the independent contractor.
- Copy 2: You also send this copy to the independent contractor.
- Copy C: You save this copy with your records.
Where to get 1099-MISC forms
You can view a sample of Form 1099-MISC on the IRS website. The form on the IRS website is for information purposes only. Do not print and file the Form 1099-MISC on the IRS website.
Instead, order the official Form 1099-MISC online from the IRS or an authorized retailer. You must use the Form 1099-MISC that is for the year the contractor did work for you.
If you are looking for an easy way to track independent contractor and vendor payments, try our 1099 software. Our easy-to-use software is designed for the non-accountant and includes free, U.S.-based support. Try a free trial today!
This is not intended as legal advice; for more information, please click here.
This article was updated from its original publication date (10/13/2011).