If you’ve hired someone who doesn’t regularly work for you to do a certain job, you may have heard of the IRS 1099 Form. It’s what you need to file to tell the IRS about the people you signed freelance contracts with. But where do you start? Don’t worry, this article will try to answer all the frequently asked questions about the 2017 1099 Form.
IRS 1099 Form: A Simple Guide
What Is an IRS 1099 Form?
The IRS 1099 Form is among the many paperwork that the IRS uses to keep track of your money. This specific form concentrates on the income you receive outside of salaries, wages, and tips. In other words, it is for miscellaneous income. The IRS 1099 Form is for those who work for a business, but aren’t treated like the business’ employees. Some things that need to be put into an IRS 1099 Form are sub-contractor gigs, freelance work, rent payments, and prizes.
Fill in the IRS 1099 Form for each person you’ve paid the following:
- $10 or more in broker payments
- $600 or more of the following:
- Awards and prizes
- Services performed by those you do not employ
- Other income payments
- Amount of cash paid from a notional principal to a person, partnership, or estate
- Healthcare and medical payments
- Payments to attorneys
- Cash payments for aquatic life that you purchased from someone who is in the fish catching trade
- Crop insurance proceeds
- Fishing boat proceeds
— SPEND-SAVE-INVEST (@SpendSaveInvest) June 21, 2017
Additionally, you can also file this form if you’ve made any direct sales worth at least $5,000 of products to a buyer for resale in any place that isn’t a permanent retail establishment.
1099 vs. W-2
If you’re a worker earning a salary or wage, your employer will file a W-2 Form at the end of the year with your annual income. If you’re a consultant, a freelancer, or a sub-contracted worker, you’ll get a 1099 Form from an employer that pays you more than $600 a year.
How to File Your IRS 1099 Form
Now that you have the basic information about the 1099 Form, it’s time to fill it up! The official IRS website offers a free .pdf version. Here are the steps in filling up the IRS 1099 Form:
- Write down the total amount you paid the freelancer or subcontractor in the tax year in box 7, Nonemployee Compensation.
- Put the freelancer’s or subcontractor’s identification number in the Recipient’s Identification Number box.
- If you need their information, make them fill up the W-9 Form or the Request for Taxpayer Identification Number and Certification.
- The IRS 1099 Form is informational and needs to be submitted with the 1096 Form. Fill that form up as well.
- In box 5 of the 1096 Form, simply add all the amounts that you wrote in all the box 7s of your 1099 Forms.
- Cross out 1099-Misc on box 6 of the 1096 Form.
- Check the instructions of your sheets to get the address you need to send these papers to.
To see someone fill up a sample 1099 Form, watch this video by HowToWithGeo. The speaker explains this complicated subject in an intelligent, yet easy to understand way:
Filling up paperwork can be daunting, especially with the IRS 1099 Form, because you need to submit multiple copies. You don’t need to worry though, as long as you follow the information in this article and read the instructions in the paperwork, you should be good to go.
How was your experience with freelancers and subcontractors? Do you prefer their work to regular employees? Share us your story in the comments section below!
UP NEXT: 9 Common Tax Deductions