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#1099 MISC FREE FORMS FOR 2016 TAX RETURNS HOW TO#
#1099 MISC FREE FORMS FOR 2016 TAX RETURNS PDF#

If these criteria are not met, the worker is an independent contractor who is responsible for paying their own taxes.

When these three criteria are met, the IRS considers the worker an employee of your company, and you are responsible for filling out a W-2 and paying your share of the FICA taxes.

Contractual Relationship: Is there a written contract? Are benefits such as pension, insurance, and vacation or sick days a part of that contractual obligation?.

Financial control: Does your company have a say in the material aspects of a worker’s job? In other words, do you decide which expenses are reimbursed or who provides necessary tools and supplies?.

Behavioral control: Does your company have a right to control what the worker does and how they perform the job?.

The IRS distinguishes one from the other by using three different criteria: They are Independent Contractors, not Employees. It simply means you have no official obligation to provide that information to them. That doesn’t mean the contractors are absolved from paying taxes on that income. Under the threshold limit of $600, you are not required to mail a 1099-MISC form to independent contractors who did work for your company. The Income is Above the Official Threshold Amount. But if you are running a bed and breakfast that is a registered company, you are generally required to send 1099-MISC forms to workers who perform the same labor, as this is a legitimate business expense.

You don’t send a 1099-MISC to the plumber who installs your new bathroom. The IRS stipulates that a business is responsible for sending a 1099-MISC form when someone provides “rents, services (including parts and materials), prizes and awards, or other income payments.”īut “someone” is not just anyone. The following conditions must apply in order for you to need to send 1099-MISC forms out. It can be a bit confusing to know exactly when you need to send the form.

When Do You Need to Send a 1099-MISC Form to Service Providers? The 1099-MISC is also used to report royalties, prizes, and awards over $10. The 1099-MISC serves as an informational reminder of how much an independent contractor earned from each company they provided services for and gives them an official form to attach to their 1040 return, in lieu of the W-2. The IRS requires businesses to file a copy of the 1099 form with them and mail another copy directly to the independent contractor so that the IRS can predict how much tax revenue to expect from self-employed individuals. Companies use it to report income earned by people who work as independent contractors rather than regular payroll employees. 1099-MISC in a Nutshellįorm 1099-MISC is the most common type of 1099 form.

#1099 MISC FREE FORMS FOR 2016 TAX RETURNS PDF#

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#1099 MISC FREE FORMS FOR 2016 TAX RETURNS HOW TO#

Knowing when and how to report income you paid to an independent contractor can be tricky.īut order to protect your business in the event of an IRS audit, it’s important to generate timely and accurate 1099-MISC forms every year. And if you’re being honest, you may have been tempted to forego documenting that pay – even if you claim it as a deduction on your business taxes. You’ve probably hired your share of self-employed individuals. Create Flawless 1099-MISC Forms – Every Single Time It can also be used to report royalties, prizes, and award winnings. 1099-MISC is a variant of IRS Form 1099 used to report taxable income for individuals that are not directly employed by the business entity or individual making the payment. Create Your Version of This Document What is Form 1099-MISC?įorm 1099-MISC is the most common type of 1099 form.