Preparing 1099-MISC Forms

Preparing 1099-MISC Forms

The 1099 tax designation refers to what are known as information returns. The IRS collects them to track revenues paid to individuals. Here is how you fill out the form. Preparing 1099-MISC Forms The 1099-MISC form is known as the "independent contractor" form. Essentially, it is a form filed with the IRS that tells them how much you paid someone during the tax year in question. If you paid a gardener $100 a month for keeping your yard in shape during the year, you would issue a 1099-MISC for $1,200 assuming the gardener wasnt a corporation or LLC. The form is then used by the IRS to make sure the gardener is reporting all the money he made during the year. The first step in preparing the 1099-MISC form is to get the right form. There are a variety of 1099 forms, so make sure you have the MISC version. Next, you need to get a hard copy, not print it off the web. The form has to be "readable" by the IRS computers, so you need the official version. You can usually get it at major post offices, big libraries and IRS offices in your area. The IRS office often gets picked over quickly. You can also order it from the IRS online, but it takes time to receive the forms and most usually leave it too close to the deadline for this option. Actually preparing the form is fairly simple. First, make a copy of the form on your printer so that you dont have to go get another form if you make a mistake. Next, total all the payments you made to the people you need to report to. You will need to prepare a 1099 for each one separately. On the form itself, you need to enter your own information in the top left box. You should include your name/business name, full address and phone number. Next, enter your tax identification number in the box directly below. Just to the right of that box, enter the tax identification number of the person you are issuing the 1099 to. Below those two boxes, enter the name of the person and their address. Now it is time to actually enter dollar amounts. Most people are going to deal with the row of boxes running vertically in the middle of the form. The first box is "1 Rents". If you need to report rents paid, do so here. If you just paid someone a basic fee during the year for doing some service for you, the number is reported in box 7. It reads "nonemployee compensation." This is the most common situation. When in doubt, use this box. Once you have the returns filled out, it is time to send them off. Ah, but there is another step. The IRS loves forms, so you are going to have to get another hard copy. The form is the 1096. It is essentially a cover sheet that tells the IRS all the forms you are sending in. It is really basic. Just fill in your name and check the box of the forms you are sending, in this case the 1099-MISC box. So, when is all of this due? You need to send the contractors copy to them by January 31st. The copy to the IRS has to be in the mail by February 28. Why the different times? It gives the contractor time to check their records to make sure your numbers are correct. Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax forms.

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