It’s time for employers to file form 1099-MISC for any contractors or freelancers they’ve used during the past year. This form must be filed for any non-employees who have been paid $600 or more during 2019. The filing deadline to have these in the mail is January 31, 2020.
What is a 1099-MISC?
The 1099-MISC is a tax form used to report non-salary income to the IRS for tax purposes. Independent contractors and freelance workers must pay taxes on any earnings they’ve received from employers during the tax year; the 1099-MISC is the form by which that income is reported to the IRS. The 1099-MISC is filed by employers, not by the contract workers.
What is the definition of an independent contractor?
An independent contractor is anyone hired temporarily (secured via contract) to complete a project or assignment for your business. Examples of independent contractors may include graphic designers, social media experts, or part-time office staff.
Do I have to send a 1099-MISC for every non-employee who worked for me?
The 1099-MISC only needs to be sent to the IRS for those independent contractors that were paid $600 or more by your company during the current tax year.
If you hire an independent contractor through an employment service, you may not have to submit a 1099-MISC for that contractor. The employment service may handle that for all the contractors they hire out, so check with them before you start the process.
You may also be able to figure this one out for yourself. Are you paying the contractor directly, or are you paying the employment firm that sent the contractor to you? If the answer is the latter, there’s a good chance the employment firm will file the 1099-MISC.
What information do I need to file this form?
You’ll need some basic information for each contractor that you’ve hired and paid $600 or more this year. Here’s the information that’s required:
- Contractor’s legal name
- Contractor’s address
- Contractor’s taxpayer identification number or social security number
- Total amount contractor was paid this year
All of this information except for the total amount paid can be found on form W-9. As a general business practice, you should request a form W-9 from every contractor before they begin work for you.
Who do I send this form to?
All 1099-MISC forms need to be sent to the IRS. You can do this yourself or have your accountant do it for you. Your accountant is well-versed in this process and will make sure you have all the bases covered.
Is there a penalty for not filing?
Yes. If you intentionally provide incorrect information or disregard the 1099-MISC filing process, you could be fined $270 per occurrence with no cap for the year. If you file your 1099s late, you could be subject to late penalties determined by the date that you actually submit the forms. The penalties can add up quickly; ignoring or delaying the filing of your 1099-MISC forms isn’t worth the risk.
Adams Accounting Solutions is happy to handle the burden of completing and filing your 1099-MISC forms for you. Give us a call today with any questions or to get the process started. Don’t wait too long. The filing deadline of January 31 will be here before you know it!
Richard Adams is a graduate of Benedictine College in Atchison, Kansas, with dual majors in Accounting and Business Administration. He is also a graduate of Wentworth Military Academy in Lexington, Missouri.