1099 Forms

November 30, 2020

Important note:

Meet the all new 1099-NEC form! It was just launched in 2020.

For many of us, this will replace using the 1099-MISC form.

1099 forms are used to report income, the acronym at the end stands for what type of income. For example, 1099-R for retirement income. 1099-INT for interest. 1099-MISC was for miscellaneous income, which included many things, like royalties, fishing proceeds, “non-employee compensation”, and more.

In 2020, the IRS decided that “Non-employee compensation” needed its own special form, so now we have the 1099-NEC. This is used for paying anyone for services, over $600 in a year that is an independent contractor - whether they have a business license or not. You might receive these. You also might need to fill them out for others that you’ve hired. To learn more, read below.

It behaves very much like the 1099-MISC.

The following blog posts were written for 1099-MISC. I will update them as soon as I can. For now, please use them to get the basic idea for understanding 1099-NEC.

What are 1099s? Do they apply to me?

How to Fill Out + Send 1099s

How to Order 1099-MISC Forms (free!)

About W-9s (coming soon)

What are 1099s? Do they apply to me? •

January 5, 2019

Whenever people are getting paid, or earning money, the IRS wants to know about it!

They have created a variety of forms to do just that. Just like a w-2 form is used to track an employee paycheck, 1099s are used to report other kinds of income.

Most often, when people say 1099, they are referring to a 1099-MISC. (Starting in 2020, 1099-NEC will be used instead.)

This refers to miscellaneous income—which is any time someone is paid for a service, and they are NOT an employee. For example, let's say Molly starts to teach yoga at her neighborhood studio, just one time a week. They pay her for each class, but do NOT hire her as an employee. At the end of the year, they would report all her earnings on a 1099-MISC.

As a self-employed person, it's common to both give and receive 1099s

For example, if you hire a photographer to do headshots for your website, or a designer to create a logo for you, or a bookkeeper to help you out, you'd likely have to give them 1099-MISCs at the end of the year. (More on criteria below.)

If you provide a service to someone or a business, then you would receive a 1099-MISC, if you meet the criteria.

[Note ~ 1099-MISCs have a partner form, the w-9. It's used to get someone's tax id number, either their social security number or employee identification number. Read more about w-9s here. (Coming soon.)]

The term 1099 + how the cool kids use it

It's important to know that there are a variety of 1099 forms, all with different suffixes and different purposes. For example, you might have gotten a 1099-INT from your bank. The INT refers to interest. Also, sometimes people use the term as a verb or adjective, as in – Did you have to 1099 him? Or, is it a 1099 job? I think this is part of being the cool kids, but I could be mistaken... ;)

Criteria, or, when to involve a 1099-MISC

For our purposes, we involve a 1099-MISC when...

- An independent contractor...
- Earns over $600 in one year...
- For service work.

To read about more situations, click here to read about 1099-MISCs on the irs.gov site.

Any time an individual—who's not an employee—is paid for a service, they are considered an independent contractors (IC). Sole proprietors and single-member LLCs are both considered ICs. It can also be a person without a business license, such as a neighborhood teen who mows your lawn all year round.

Some things to know ~

• You can order the 1099-MISC forms from the IRS for free, or you can purchase at office supply stores.

• Order or purchase these early! They can run out. Add to your November or early December calendar.

• If you fill out by hand, they will be carbon forms.

• You must provide a copy to the Independent Contractor and to the IRS. Currently, the due dates for these are the same. (Sometimes they vary.)
- Copies due to the Independent Contractors January 31st.
- Copies due to the IRS January 31st.

• 1099s are usually accompanied by a 1096 form. The IRS will send this automatically to you if you order from them. Do not be alarmed! It is very simple, and acts like a cover letter. You DO need to send it in, along with the 1099s.

More Help with 1099-MISCs

• To order 1099-MISCs from IRS.gov, click here.
• Click here to see a walkthrough of ordering.
• Click here for more on How to Fill 1099’s Out and Submit.
• 1099s have a partner, the w-9. To read more on this, click here. (Coming soon.)
• Meet the the 1096 form, like a cover page for 1099s. (Coming soon.)

1099s are good things!

If you're receiving a 1099, it means you got paid for something in the last year! If you're giving them out, it means you hired someone to help you or your business. These are good things! Whenever you're working with 1099s, it's nice to remember the experiences they represent.

Happy Working,

♥ Jenny Girl Friday

How to Fill Out + Send 1099-MISC forms

January 10, 2018

If you paid any Independent Contractors more than $600 in one year, for service work, you need to submit a 1099-MISC form (1099 for short).....both to the Recipient and to the IRS. To read more, click here.

Time Required: 5 - 10 minutes per form (+more time if you have to collect W-9s)
Cost: About $1.50 in postage to IRS + any postage costs to mail to recipients
Due: January 31st
Frustration: 3 out of 10
Tedium Factor: 10 out of 10

Summary

You may file electronically or on paper.

The information you need - Your name, address, phone number, and tax ID number. Your recipient’s name, address, tax ID number. The amount you paid them.

Three copies - #1 goes to the recipient, #2 goes to the IRS, and you keep #3 for yourself.

IF filing on paper, you must work with two more forms. A 1096 acts as a cover sheet when mailing 1099-MISCs (now 1099-NEC) to the IRS. Use W-9s to collect information from recipients. More below....

Photos with notes below. First some information.

You can choose to use paper forms or to file electronically.

If you use Paper:
Paper forms are carbon and MUST be ordered from the IRS or another source. They canNOT be printed. To ORDER forms, click here. To see a walkthrough of ordering forms, click here.

If you’d like to file electronically, try:
Tax1099.com or
1099online.com
I haven't worked with e-filing yet, many readers report they are pretty straight forward. Other options - some tax software systems provide this, such as TurboTax.

Some accountants will also do these for you.

What you need~

For each recipient:
• Full legal name (of the person)
• Legal name of the business
• Address
• Tax ID Number ~ Either their SSN (social security number) or EIN (employer ID number)
• Amount you paid them ~ called "Nonemployee compensation"

If filing with paper forms:
• 1096 Form
• Large Envelope
• Postage
• Black ball point pen

Use this prep sheet to keep things straight! Click on it to get a PDF. :) This will also help when it's time to file your IRS taxes later this Spring.

Heads Up! There are two more forms to know about! 1096 and W-9

Like the Charlie's Angels, there are actually 3 forms that you'll be working with! They always go together.

W-9 The IRS created a W-9 form to collect the required information from recipients, including their tax ID. It's a one page form with lots of pages attached. As you can imagine, tax ID numbers are sensitive information, and W-9 forms must be stored securely. You can collect W-9s on paper, or electronically. Click here to download from the IRS.gov site.

1096 This is like a cover letter. When you submit certain types of forms to the IRS, they want a 1096 as well. It's basically a summary of everything you're sending in.

Important Things to Know When Filling Out Paper Forms!

1. Use a BLACK ball point pen, press hard!
2. Use legible, block printing
3. Do NOT add any symbols. NO dollar signs, NO apostrophes, NO number signs.
For Susie's Flowers, you'd write: Susies Flowers
For an apartment #302, write APT
4. Do NOT cut the 1099 forms
5. Write the dollars + cents for all amounts. For example, 1235.00 is correct. (1235 is NOT correct.)

> > If you happen to make any mistakes, check the VOID box at the top of the form, and start again.

Mailing Information

• Address for Washington Residents:

Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999

• You must use a FLAT envelope, with no folds.

• It must be postmarked on or before January 31, 2018.

1099-MISCs Forms

Two separate forms are on each page. This shows the top sheet which is sent to the IRS. Do NOT cut this page. The pages underneath are torn in half before giving to the recipients.

Notice the names. It's important to write both the recipients full legal name AND the business's legal name.

Whenever a business is a Sole Proprietor or Single Member LLC, you may use either the SSN (social security number) OR an EIN (employer identification number).

This example shows the Payer having an EIN.
The recipient using their SSN.

On the bottom form, I made a mistake! I used a # sign. This is not allowed, so I stopped filling it out and marked the VOID box.

After they are filled out, tear the strip off and separate the forms.

Look for THREE to keep, and do the following:

1. For the IRS - send in the mail, in a flat envelope
2. For Recipient - send in the mail, may be folded
3. For Payer - keep in your tax records

Here's a look at the 1096 Form.

Moving from left to right with notes:

1. Be sure to check the box 1099-MISC.
2. Use your EIN ....OR.....your SSN. (Not both)
3. Number of forms. Put the number of filled out 1099-MISCs. There are two per page. If you filled out for 3 recipients, you're write "3".
4. "Total amount reported with this Form" Add up the total of all dollar amounts on all forms. If I was reporting $2100 for a coach and $1400 for a designer, I would record $3500 in this box.

Finishing up!

To the IRS - one 1096 forms plus the top copies of all 1099-MISCs
To the recipients - their 1099-MISC copy
For your records - full page copies

Well done! Bravo! Even though the contents of this are straightforward, it can feel so taxing because it takes a lot of care and attention, yet it is boring. In addition, just the thought of the IRS can be triggering or get the adrenaline going. ♥ If you can, find a time to relax a bit. Perhaps a bath, a trip to Ladywell's, a long walk, even a short walk around the block.

Also, remember to check off of your Cheat Sheet / Sticker Chart!

Cheers!

: ) Jenny Girl Friday

How to Order 1099-MISC Forms (free!)

December 1, 2017

2021 Update - We are now using the 1099-NEC forms … in place of the 1099-MISC forms.

I will be updating this blog post soon. In the meantime, you can still use all of the steps and instructions … just be sure to select the 1099-NEC form.

Not sure if you need 1099-MISC forms? Read about them here.

When: Order in Nov or Dec
Forms Due: January 31
Estimated Time: 3 minutes
Cost: Free
Frustration Factor: 1 out of 10

If you plan to use paper 1099-MISC forms (1099s for short), you'll need to order them from IRS.gov. It's not possible to simply print them off ... because they are carbon forms.

Here are the steps. There are screenshots are below.

1. Go to IRS.gov
2. Select "Forms & Publications" ~ Top right side
3. Select "Order Forms and Pubs" ~ Left side
4. Select "Online Ordering for Information Returns and Employer Returns"
5. Scroll Down to see chart of forms
6. Notice there are two empty boxes for each form ~ one is for 2017 forms, the other is for 2018 forms
7. Keep scrolling until you see 1099-MISC
8. Put the desired number of forms that you need in the left box, for 2017 forms
9. Put a number 1 next to the Instructions
10. Scroll down to the bottom and select "Add to Cart"
11. Follow the checkout process

The first picture starts on the "Order Forms and Pubs" page.

The Chart of Forms - The actual chart is longer than what's shown here.

The beginning of the checkout process.

To read about 1099s + w-9s, click here. (Coming soon.)
Need help filling out your 1099s? Click here. (Coming soon.)

Great job staying on top of things for tax season!