What is it?
The 1099-MISC Form is an IRS tax form used to report payments made from a company to contractors or consultants. The 1099-MISC is unique in that it must be submitted to both the IRS and the consultant or contractor receiving payment.
Why Do You Need It?
- If You’re A Company:
If you pay a consultant or subcontractor more than $600 in a given year, you must report it to the IRS using a 1099-MISC form.
- If You’re A Consultant or Contractor:
You’ll use the 1099-MISC forms that your clients send you when preparing your tax return, to calculate your taxable income.
Tips and Instructions for use
The 1099-MISC is an 8 page document, but there’s only one form that needs be filled out (the document includes several copies of the same form, which are filed in the Payer’s records, sent to the Payee, and submitted to both the IRS and your state’s tax department.
When completing the form, you’ll need to identify yourself (the Payer), the consultant or contractor you’ve paid (the Recipient), and the details of amounts you’ve paid over the past year.
As the Payer, you’ll need to file the 1099-MISC form with the IRS and your state’s tax office by the deadline, which varies depending on the year and filing method chosen. You’ll also send the “Payer” section of the form to the listed “Recipient” so that they may complete their annual tax return.
Many 1099-MISC Forms found online use the IRS’ informational copy, with the second page printed in red. Do not use this copy for your filings or you’ll be subjected to penalties by the IRS.
You’ll need to complete and file a 1099-MISC if:
- You paid royalties or broker payments instead of dividends or tax-exempt interest in an amount greater than $9
- You paid or provided more than $600 in rents, service fees to non-employees, prizes, benefits payments (healthcare, for example), cash payments for fish, attorney’s fees, or fishing boat proceeds.