What is a Form 1099-MISC? And who should receive a 1099?
IRS Form 1099-MISC summarizes income from all non-employee compensation. It’s what independent contractors use to calculate and file taxes. You must send out a Form 1099-MISC to all contractors you’ve hired and paid more than $600 during the year; this includes any partnerships or LLCs you may have contracted throughout the year.
There are a few exceptions to this rule: You do not have to send 1099s to most corporations (note: you must send 1099s to all lawyers you’ve hired, even if they’re incorporated), property managers for rent, sellers of merchandise, etc. See this article for a full list of exemptions.
What’s an Independent Contractor?
Independent contractors are temporary workers that provide goods or services to another company under specified terms outlined in a contract, such as an Independent Contractor Agreement. Independent contractors can be individual workers, companies or corporations. They are typically compensated on a per-project basis, and their employers are not responsible for withholding taxes from their pay. Instead of receiving a W-2 like traditional workers, independent contractors must report self-employment income with a Form 1099.
What are the 1099 Deadlines beginning 2017?
In an effort to combat fraud, The Protecting Americans from Tax Hikes (PATH) Act of 2015, was passed by Congress and signed by President Obama in December. The act revised the filing deadline for certain types of Form 1099.
Beginning with 2016 forms, employers will now have one filing deadline for Form 1099-Misc – January 31.
The new January 31 deadline applies to certain types of 1099s. If you’re filing Form 1099-Misc and reporting amounts in Box 7: Nonemployee Compensation, then you will need to meet the new filing deadline of January 31.
(If you don’t have amounts in Box 7, then the deadline remains February 28 for paper filings or March 31 for electronic filings.)
What is the Impact for Employers
With this new deadline, it’s important that employers be well prepared to complete year-end tasks. This means:
- Verifying accuracy of contractor information
- Reporting/submitting any year-end adjustments as soon as possible
- Reviewing year-end totals for any discrepancies
Content credit: Intuit