Guide: How To 1099 Someone?

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You know what you don't need? More employees. And why should you hire more people? It's expensive. You have to foot the bill on everything from training to benefits.
You have enough to worry about. It's time to start outsourcing. But when tax season comes, what do you do? Keep reading our guide on how to 1099 someone you've been using to suit your outsourcing needs.

What is a 1099-MISC?

This is a form that means "miscellaneous income". You'll send it out to any independent contractors who did business with you in the last year. It is the equivalent of a W-2 form for outsourced work. You've got until January 31st to get these forms in order and sent out. Not meeting this deadline will cost anywhere from $30-100 a form.

Step 1 - Check Your Information

Make sure you have the current name, address, and social security numbers on file for your independent contractors. This information should have been collected via W-9 form. If you don't have this information on file, the IRS will allow you to withhold 28% of the person or company's pay.
When trying to figure out how to 1099 someone, you might be wondering if there are any exceptions. Yes, there are! Anyone who received less than $600 in payments from you is excluded. Personal payments and transactions are also excluded.

Step 2 - Grab Your Forms

You cannot download these. You have to either order them from the IRS or pick them up at an office supply store. Another alternative: Some accounting software has these forms included. This will save you a ton of money in the long run.

Step 3 - Fill Out the Forms

These forms are printed in triplicate. You will send Copy A to the IRS. Copy B goes to the independent contractors, and Copy C is yours to keep for your records. You'll start with your information. This could be your social security number if you're a sole proprietor or an employer identification number for the majority of other businesses.
You'll work your way down, filling out your information and then the information of the contractor who worked for you. Enter all of the money paid to the person or business and any withholdings as well. If using accounting software, a lot of this will be done for you.

Step 4 - Mailing Out

After you've completed and mailed all of the 1099-MISC forms, the next step is to mail a 1096 to the IRS. This is the form that summarizes the total of monies spent on all of your outsourcing/independent contractors. You have until the last day of February to get this done. You must send this form in along with copies of all of the 1099-MISCs.

Final Thoughts on How to 1099 Someone

This task is a headache, there is no doubt about it. However, it's a requirement and you need to get together with your accountant ahead of time to work out the details so they can help you make the process as painless as possible.
They aren't the only ones who can assist. Refer to our 1099-MISC generator to automate your accounting and pay stub needs. And if you have to make your own paystubs, be sure to use the ultimate check stub maker.


Frequently Asked Questions

Yes, you can correct errors on a 1099-MISC form by filing a corrected form with the IRS and providing a copy to the recipient. Be sure to check the "CORRECTED" box at the top of the form.

You can file 1099-MISC forms with the IRS electronically using the Filing Information Returns Electronically (FIRE) system or by mailing paper copies of the forms.

You can obtain 1099-MISC forms from the Internal Revenue Service (IRS) website, local IRS offices, or by purchasing them from office supply stores.

The deadline for filing 1099-MISC forms electronically is March 31st, while the deadline for filing paper copies is February 28th of the year following the tax year in which the payments were made.

Penalties for not filing 1099-MISC forms range from $50 to $270 per form, depending on how late the forms are filed. In some cases, intentional disregard of the filing requirements can result in penalties of $550 or more per form.

You'll need to provide the payer's and recipient's names, addresses, Taxpayer Identification Numbers (TINs), and the total amount of non-employee compensation paid during the tax year.

A 1099-MISC form is used to report non-employee compensation. It is issued by businesses to independent contractors who receive payments for their services.

1099-MISC forms must be sent to recipients by January 31st of the year following the tax year in which the payments were made.

The business or individual who has paid an independent contractor for their services is responsible for issuing the 1099-MISC form.

Independent contractors who have earned $600 or more in a given tax year from a single client must receive a 1099-MISC form from that client.
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Guide: How To 1099 Someone?
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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