Who Gets A Form 1099-MISC?

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Every once in a while, small business owners face the question of who gets a form 1099-MISC. On this point, the law is clear. If you've done business with an independent contractor, you probably have to send them a 1099 form. Of course, you should also report this payment to the IRS.
That said, you don't need to send out this form to absolutely everyone you've worked with in the past. In this article, we'll give you a brief overview of who should receive a 1099 form.

Also read: Filing For Both W2 & 1099 

Who Gets a 1099-MISC

Before sending out the form to someone, you should confirm your business' association with them. With an independent contractor, you only control the result of their work. As a general rule, your relationship with them will be based on a specific project.
With an employee, you control when, where, and how they perform their job. Most relationships with employees last for an indefinite period of time. Also, employees receive regular paychecks. An independent contractor gets paid upon the project's completion or at scheduled times. Treating employees as independent contractors could lead to severe penalties.
Once you've verified the contractor's status, take a look at your records. According to the law, you should only issue a 1099 form to independent contractors to whom you paid over $600 during a tax year.

Also read: Who Is Classified As 1099 Employee?

Exceptions

As we've mentioned, there are some exceptions to who should get a 1099 form. For instance, S and C corporations (including LLC's) are not subject to 1099 reporting. However, this usually doesn't apply to payments for legal services.
Payments to rental agents and tax-exempt organizations don't need to be reported either. The same applies to payments for merchandise, storage, freight, and similar items. Finally, attorneys to whom you paid over $600 in fees or gross proceeds must also be given a 1099 form. In this case, it doesn't matter if said attorney is a corporation.

Also read: Report Freelance Salary Without 1099 Form

Filling Out the Form

Now you know who needs a 1099-MISC form, let's confirm what it should look like. For starters, most payments to independent contractors should be reported in box 7 on your 1099 form. By doing so, you're classifying a payment as non-employee compensation.
Before filling out anyone's 1099 form, you'll need their W-9 form. The W-9 contains the person's name, address, and tax ID number. This can be a taxpayer identification number (TIN) or Social Security number (SSN).
What happens if someone refuses to give you their tax ID number? In that case, you're still legally required to file the 1099 form. However, the payment will be subject to backup withholding. Keep in mind that you have to send out all 1099 forms to their recipients by January 31st. Copies of those forms must be submitted to the IRS, along with the Form 1096.

Also read: A Full Breakdown of W2 And 1099 Filing Specifications

Conclusion

Hopefully, this guide has helped you understand who gets a 1099-MISC form. To avoid any payroll tax issues, make sure to keep track of all your independent contractors.
Need to create a 1099-MISC form? By using our online generator, you can do so in less than two minutes! All you need to do is enter the information discussed above along with your company's information, and you're done! If you need to create your own payslip, you can try out our check stub maker.


Frequently Asked Questions

Yes, there are penalties for failing to file Form 1099-MISC or filing it late. The penalties vary depending on how late the form is filed, and can range from $50 to $270 per form, with a maximum penalty of $1,113,000 per year.

Yes, you are required to send a copy of Form 1099-MISC to the recipient by January 31st following the end of the tax year. You should also send a copy to your state's tax department if required by your state's tax laws.

No, you only need to send a Form 1099-MISC to vendors who are not incorporated (such as sole proprietors, partnerships, or LLCs) and have been paid at least $600 during the year for their services. Corporations and employees do not receive a Form 1099-MISC.

You can file Form 1099-MISC electronically through the IRS Filing Information Returns Electronically (FIRE) system, or you can mail paper forms to the IRS. If you are submitting 250 or more forms, you must file electronically.

If you made a mistake on a Form 1099-MISC, you can file a corrected form with the IRS. You simply check the "CORRECTED" box at the top of a new form, then complete the form with the correct information and submit it to the IRS.

You'll need the following information to complete a Form 1099-MISC: your business's name, address, and taxpayer identification number (TIN); the recipient's name, address, and TIN; and the total amount of payments made to the recipient during the tax year.

A Form 1099-MISC is a tax document used to report income received by individuals or businesses who are not employees. This form is used by the IRS to track income received by self-employed individuals, freelancers, or independent contractors.

If you receive a Form 1099-MISC, you should report the income on your tax return. If you are self-employed or an independent contractor, you will typically report this income on Schedule C of your Form 1040, and may also be subject to self-employment taxes.

The deadline for sending out Form 1099-MISC to recipients is January 31st, following the end of the tax year. The deadline for filing the forms with the IRS is also January 31st, if you are reporting nonemployee compensation in Box 7.

Typically, businesses must issue a Form 1099-MISC to any non-employee or unincorporated business, such as a freelancer or independent contractor, who has been paid at least $600 in the calendar year for their services.
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Who Gets A Form 1099-MISC?
James Wilson

After graduating from McCombs School of Business in Texas, James joined ThePayStubs as a CPA to make sure the numbers we provide our clients are correct. Read More

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