And should you worry about it?
Ahh, Tax Season! The most relaxing time of the year – said no one ever! As a finance professional, my goal is to make tax season as seamless as possible for my clients. Caring for your business (and personal) finances throughout the year, sure makes things easier.
One of the questions I hear more often is “do I need to send 1099?” and “what is 1099?”. IRS has several 1099 forms, from dividends to social security income (you can see a list here). The form 1099-Misc is related to income paid for non-employees (Contractors). This is the most common type my clients, and I encounter.
To whom should I send a 1099-Misc?
If you paid a U.S. based contractor more than $600.00 in the calendar year. A contractor is anyone that provided you with a service. A few examples, but not limited to:
- your bookkeeper
- your tax professional
- your attorney
- your cleaning company
- Anyone who does repairs for them
If your contractor is an S-Corporation or a C-Corporation, you will not need to send them a 1099-Misc.
How do I send it and what do I need?
From your consultant, you’ll need to request a W9 (click here to download it). This will allow you to have their tax information and mailing information.
If you use an accounting system, such as QuickBooks Online, you can track the information within the system. You can mail the return to the consultant and IRS (click here to order it with IRS, and where to mail here on page 7) or you can file them online (I use https://www.tax1099.com/ – it’s about $2.90/form).
You’ll need to send the contractor a 1099-Misc by January 31 and send IRS the same by the last day of February – this is the date you must mail it (post office stamp), not when they need to have the information on hand)
Anything else I should know?
Yes! If you process payments with a credit card, you do not need to send a 1099-MISC! The reason is: the merchant will need to submit a 1099-K (Payment Card and Third Party Network Transactions) when the transactions reach a certain threshold.
We hope now tax-season can be a little less stressful!
Schedule a free consultation with me to answer any questions you might have.