September 5, 2013

Understanding the Form 1099-Misc

Posted in Finances at 10:52 pm by otherdeb


It’s been a while since I’ve done a financial post, and it’s way past time for one. I was going to sell this article, but the gig fell through, so here it is.

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The IRS 1099 Misc form needs to be filled out if you have certain specific types of what is called miscellaneous payments to non-employees like independent contractors. It also covers payments you make for certain types of business transactions where a middleman is involved. The form is filled out by the person making such payments to you, and must be included when you file your income taxes in April.

When to Use the IRS 1099 Misc

 

If you have paid an individual or service provider at least $10 in royalties; over $600 for rent, prizes, awards, services, medical payments health care payments; any payments for the proceeds from a fishing boat; or any payments of over $600 to an attorney, you must file an IRS 1099 Misc. You also need to use this form in you have made a sale of $5,000 or more to a buyer who will be reselling your goods. Note that personal payments are not to be reported on this form. Some of the forms of compensation that must be reported on this form are payments to non-employees, professional fees, payments by attorneys to witnesses, payments to non-employee entertainers, referral fees, and exchanges of services between two businesses.

 

This form is only for reporting payments made by you in the course of your business dealings. The IRS’ instruction Form breaks down not only all the items that you must report via this form, but it also notes all the exceptions and the various types of payments that should be reported on other forms, as well as those that should not be reported by you at all.

 

Filing the IRS 1099 Misc Online

 

You must send 1099 Misc forms to those you have made payments to by January 31st. Further, you must then file the forms by March 31st. These completed forms must also be filed with the state tax agency. The filing dates for state agencies vary so you need to check with your state’s tax agency to ascertain the date.

 

Currently, it is recommended that you complete filing the IRS 1099 Misc online. To do so, you will need to have software that allows you to scan in the completed forms for transmittal to the IRS. The preferred system for filing the IRS 1099 Misc online is the Filing Information Returns Electronically System (FIRE System), provided at the IRS website. This system is available to you at no charge, and can be accessed seven days a week, 24 hours a day.

 

Filing the IRS 1099 Misc form, and filing it in a timely manner, is a good way of staying on top of your payments to independent contractors and other non-employees that you do business with, whether occasionally or on a regular basis. Filing it electronically (online) makes it easier for you or your accountant to stay on point with your reporting activities each year. It also eliminates the need for extra cover/transmittal forms for each group of 1099 Misc forms you file.

 

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