When your company hires contractors and pays them more than $600 during the tax year, you’ll need to file the 1099 Misc form. The company owner uses this form to report payments they have made to contractors and freelancers. Now, it might sound like a difficult process, but you don’t have to think about it. Once you have the right resources in place, it is simply a straightforward task. We came with this article to explain and provide you with the easy procedure to prepare the Internal Revenue Service (IRS) file Form 1099-Misc and the best ways to file the form 1099 Misc online (2020). To explore more, you can easily connect with the team of accountingguide.co on QuickBooks support by filling up the form or do 24/7 QuickBooks live chat support.
What is a 1099 Misc Form?
A 1099-Misc is one of the forms used by the IRS used to report certain types of miscellaneous income, including income from work as an independent contractor. It also helps you to collect business-related information about payments they made in the course of doing business in a given year. You may remember your W-2, but you may also obtain a number of 1099 forms that are equally relevant when it comes to correctly filling out your tax return. These related forms are most commonly known as information returns and usually used in terms of income reports from non-employees like gross receipts and more other income types.
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The Thing to know About 1099 Misc Form:
As it helps you to figure out how much income you received during the year and what kind of income it was. Also, whether you receive income or not, you should still keep your records and Report that revenue on your tax return in different places, depending on the type of income.
What are the Different Types of 1099 Misc Form?
Here are the various types of 1099s that you might come in your way and you could also find in your mail. These include:
- 1099-Misc: It is the most common form that is discussed above.
- 1099-B: The form normally includes the accurate information of sales such as the sold date, the date you bought the security, and the amounts you paid when bought and sold it.
- 1099-DIV: You get this particular form if you receive mutual fund or stock dividends capital gains distribution during the year.
- 1099-C: When your lender forgives a car debt or mortgage during the year in such a situation that particular payment may be considered taxable income and will be reported in this form.
- 1099-G: This form is generally reported by the state if you got a tax refund from your State last year. Your state payout will only be taxable if you reported your taxes the year before.
- 1099-R: You would receive this form of 1099 if you received a distribution from your pension account during the year.
- 1099-K: If you have a significant online sales business, you can get the report of your gross sale in this form, called eBay or Etsy. Rideshare drivers could get one too.
What is the Purpose of a 1099 Misc Form?
In particular cases, the Internal Revenue Service (IRS) requires that you complete the 1099 form. When you work as an independent contractor provide an agency with unique resources rather than being a constant employee.
As an independent worker, that means you can monitor what you’re working on and how it can be done. An organization; you may only monitor or check the outcome of the work that you have done.
How to file 1099-Misc form:
There are many steps that you will need to take to file form. This involves gathering the information needed, submitting Form 1096 if you file a sending a copy to the IRS, physical copy, and sending a copy to the independent contractor. For every contractor you have to have the following items that you should be able to find on their individual W-9:
- Valid name and address of the Contractor.
- The cumulative amount you paid the contractor over the course of the year.
- Fill out the form 1099-Misc using the first step details you got.
- If you are filing by mail, be sure to send copy A to the IRS by February 28.
- Taxpayer ID number of the contractor, which is usually their social security number if they are a sole proprietor or a given identification number whether they are a foreign citizen or non-resident.
- Make sure you must have sent your Copy B to the contractor before January 31. It lets them file their own taxes under the time limit.
- When you have submitted a paper copy of 1099 to the IRS, you must also apply the form 1096. For that particular taxpayer, the 1096 form helps track any 1099 that you file. The 1096 deadline is the same as the 1099 deadline.
- Check if you need to file your 1099s with the state tax commissions, the CPA will be able to help ensure that you comply with your state tax laws.
Methods to File a 1099 Misc with IRS:
Basically, there are two methods to fill a 1099 Misc with IRS:
By Paper Filing
It is the most popular method of filling out the 1099-Misc Form Copy A, and 1099-K Form Copy must be sent to the IRS for each form you compile. You are merely using the official forms available on the official IRS. This is necessary so that the forms can be read by their scanning systems.
By Electronic Filing
In the case of electronic filing, you’ll need to use a special file formatting program that developers handle better. Anyone wants to register online. This method is preferred by the IRS and there are significant benefits to it:
- Federal and State Filing combined for 34 different States
- A bulk display of 1099s
- Form no 1096 needed
- Confirmation of receipt and delivery of the Sample.
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So far, we have discussed everything about how to file a 1099 Misc Online? (2020). It is hoped that this article helps you in gaining a better understanding of the 1099 Misc form. For further inquiries, you can connect with the professional team via email [email protected] along with your query details or live chat. The team will answer back to you soon or maximum they take 2-3 hours.