How To File Form 1099 Electronically
Forms W-2 forms are for reporting employee’s annual wage and tax withheld by the employer to be filled with the SSA. (learn >> HOW TO FILE A W2?) However, if an employer heirs contract workers or other businesses, such as attorneys, freelance graphic designers, independent contractors, or vendors they need to fill up Form 1099. There are 20 variants of 1099s, however, 1099-MISC is most common of all, applicable for payments that are more than $600 made over the course of the year to independent contractors.
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Know more about due dates for 1099-misc forms, gathering information, who should file/receive a 1099-misc form? Get the right 1099-misc form and how to print, distribute, and file 1099-misc form correctly.
Attention: Employers should NOT use the 2020 version of the 1099-MISC Form for 2019 payments! Ensure that you only download the 2019 version of 1099-MISC for payments made in 2019 to nonemployees and others. The 1099-MISC form has been changed for 2020, and a new 2020 Form 1099-NEC will now be used to report payments to nonemployees. To ensure you are using the correct form, check that the date “2019” on the top right.
1099 Limit To Report
The $600 Cut-Off
Employers who’ve paid less than $600 to any contractor over the course of financial year need not fill the 1099-MISC form. However, even if the contractor gets paid less than $600, they still need to report this in their personal return.
If you are engaging small business owners or pay a partnership more than $600 during the tax year, they must be issued a 1099-MISC. You can learn more about How To File Business Taxes Online here .
When You Can’t File 1099-MISC ?
Don’t File 1099-MISC Form For Following:
- If you’ve engaged C Corporation or S Corporation (but do complete W-9)
- Don’t file 1099s for employees
Gathering Information for 1099-MISC Form
A. The W-9 Form
Before filing the 1099-MISC you need to gather some standard information about the contractor.
- Their legal name
- Their address
- Their taxpayer identification number (Social Security ID for individual / Employer ID no. for business)
Each independent contractor should be made to fill a W-9 form at the start of any assignment. This should be the standard practice to verify their tax identification number.
B. Check your bookkeeping records
C. Confirm the total amounts you’ve paid to each contractor during the tax year
Your Business Information:
- our federal Employer ID Number
- Your business name
- Your business address
Recipient’s Tax ID Number: An Individual’s SSN / employer ID number, (EIN), / federal tax ID number.
Payment Amounts to be entered in the appropriate box:
- Box 1: Amounts paid in rents
- Box 2: Royalties (at least $10 in royalties to someone during the year) including intellectual property (patents, copyrights, trademarks).
- Box 3: Other income payments including prizes and awards such as sweepstakes payments (in boxes 3 and 7) and these do not include prizes and awards to employees, payments arising out of punitive damages, or paid to participants in research studies. These are the kind of payments that do not fit in any other box.
- Box 6: Medical and health care payments, including payments made to “physicians or other suppliers or the provider of medical / health care services. It includes any payment to medical and health care insurers under health, accident, and sickness insurance programs”.
- Box 7: Services performed by a non-employee, including payments to independent contractors, vendors, freelancers, and other businesses. This includes any prize, commission, or award given to such individuals or businesses. Payments made to non-employees for parts and materials supplied are also included.
- Box 9: Direct sales of $5,000 or more of consumer products to any reseller for reselling.
- Box 14: Gross proceeds to an attorney
Ordering the correct 1099-MISC Form
1099-MISC forms are available at office supply stores. You can buy them directly from the IRS by logging in to your account, or it can be obtained through compatible business tax software such as TurboTax as they have the correct forms already. However, you cannot use a 1099-MISC by downloading it from the Internet because the red ink on Copy A is special and cannot be copied. This is the reason only official forms are valid.
Printing and Distributing a Copy of 1099-MISC Forms
The 1099-MISC is a multi-part form. Here’s the description of the replicated copies to be sent to different concerns:
- Copy A to be sent to the Internal Revenue Service.
- Copy 1 to be sent to the state tax department(s).
- Copy B to be sent to the recipient*
- Copy 2 is for the recipient to be filed along with their income tax return*
- Copy C is for the payee or the employer
*Copies B and 2 must be received by the contractors no later than January 31 of the year after the tax year. Here you can use the online fillable PDF form if you have just a few forms to send.
Filing 1099-MISC Forms with the IRS
You can E-File 1099-MISC forms with the IRS by Filing Information Returns Electronically (FIRE) system.
However, before filing, employers need to obtain their Transmitter Control Code (TCC) by filling out a requisition Form 4419 from the IRS. Once received, you can create an account on FIRE and proceed with the filing.
When Are 1099s Due? (2020 Deadlines)
The deadline to file Copy A with the IRS is January 31 of the following year, if you’re reporting payments in box 7.
Otherwise, the deadline is February 28 for filing it on paper, and March 31 of the following year if you file electronically.
The deadline for sending Copy B of Form 1099 contractors is January 31 of the following year.
The due date is extended to February 18 while reporting a payment in box 8 or 14 of the 1099-MISC.
The information provided here is for general purposes and to help users collect information about what they need to prepare and print 1099-MISC forms. Every business has its unique situation for which taking the help of a professional or competent tax filing software service such as TurboTax is recommended as they can complete all the formalities and offer a tax guarantee and fulfill all your tax filing requirements.
To know more about Free Basic tax filing with TurboTax call the 24/7 toll free helpline 📞 1-855-481-5333.