A 1099 form is filed when a person has an independent contractor working for them, and the IRS has stringent rules in regard to whether or not a person is considered to be an independent contractor. Discover how much a person must be paid to necessitate a 1099 with help from a tax bookkeeper in this free video on filing taxes.
Hi today we're here to talk about filing a 1099 form. Most of the time when you use the 1099, you'll be using the 1099 miscellaneous. If you have someone that works for you as a independent contractor you'll use a 1099. Now the IRS rules are very stringent in regard to whether or not you can be considered an independent contractor so you need to watch the guidelines very closely because they will disallow some independent contractor status if you're not careful. Once you determine that you have a true independent contractor situation and you've paid this individual throughout the year, anyone that you paid more than 600 dollars to throughout the year for services will require a 1099. Depending on whether or not you're corporation, an LLC or sole proprietor, you'll either need to use your employer identification number, that's the EIN number or your social security number and that will be entered onto the 1099 form. Workers, social security number and the amount of compensation that you paid to this individual. The compensation will go into the box titles non-employee compensation, it's box number 7 on the 1099. If by chance you withheld any federal or state taxes on this individual, you'll also need to enter that on the 1099 typically you won't have withheld any so it's not an issue but just be aware of it. The next step would be to fill in the name and address of your business as well as the name and address of the contract employee. You need to give or mail a copy of the 1099 to the independent contractor no later than January 31st of the year following the year the work was performed. You'll need to mail copy B and copy 2 to the contractor. Copy 1 will be sent to the contractor's state tax department. If by chance you live in a state such as Tennessee, where we're located there's no need to mail the copy 1 because there are no state income taxes in Tennessee and there's 5 or 6 other states that don't have state income tax. Copy A will need to be sent along with a form 1096 to the IRS. The form 1096 is a summary of all of the 1099s that you've issued. Copy A that goes to the IRS will need to be filed with the IRS prior to February 28th unless you're filing electronically and if so they give you an additional month so you have until March 31st. And finally retain copy C for your records.