Small Businesses and Self Employed individuals may need to send a 1099 form to those they paid.
Deadline: January 31
I’m guessing many of you reading this are familiar with the 1099. If not, here is the deal. The 1099 form is a document the Internal Revenue Service (IRS) refers to as an “information return.” This form reports various types of payments you (your business) made throughout the year.
In regards to filing 1099’s
Who must prepare and file a 1099? Small businesses and self-employed people who paid someone over $600 in 2016 (see below to find out who that someone is).
What to file? Prepare a 1099 form for each payee and send them a copy. Send a copy of the 1099 the IRS (with a form 1096).
When to file? Send 1099’s to contractors for payments made to them last year by January 31.
Why file? So the IRS won’t fine you for not sending it and so they can collect more taxes on those who received taxable income.
How to file? Buy blank 1099 forms and use computer to print and mail them in, use an online 1099 service, ask your favorite accountant or tax consultant to prepare and file them for you.
In more detail…
If you are a small business or self-employed, you must send a 1099 if, as part of your trade or business, you made any of the following types of payments.
- Services performed by independent contractors or others (not employees of your business)
- Prizes and awards
- Backup withholding or federal income tax withheld
- Crewmembers of your fishing boat
- Gross proceeds of $600 or more paid to an attorney
- Dividends or other distributions to a company shareholder
- There are a few other not-so-common types of payments (see link below)
You DONT have to file one if any of the following situations apply:
- You are not engaged in a trade or business.
- the payment was made to another business that is incorporated, but was not for medical or legal services or
- the sum of all payments made to the person or unincorporated business is less than $600 in one tax year
If you have any questions feel free to contact me!
Source and additional info: Internal Revenue Service Am I Required to File a Form 1099 or Other Information Return?