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How to File a 1099 Form

Patrick Russo

As a small business owner, when and how are you required to report what you paid to independent contractors in a given year?

In this brief no-nonsense guide, we will answer this and several other common questions about 1099 forms.

What is a 1099?

A 1099 is a form that the IRS uses to collect information from businesses related to payments they made in the course of doing business in a given year. There are at least nine types of 1099 forms (e.g. 1099-S, 1099-B, 1099-C, 1099-A, 1099-R, 1099-K, 1099-INT, 1099-DIV, 1099-MISC), but the most common is the 1099-MISC.

When am I required to file a 1099-MISC (and by when)?

Generally speaking, if you paid someone (or some business) at least $600 in a calendar year, you are required to file a 1099-MISC form. Here is a list of payment types that trigger the required form. You don’t have to file a 1099-MISC for payments made to corporations or employees.

The 1099-MISC form has multiple parts. Copy A and Copy B concern the IRS. Copy 1 and Copy 2 concern your particular state. You are required to file Copy A of the 1099 Form to the IRS by February 28, 2018, but Copy B is due to the recipient (i.e. non-employee or independent contractor) by January 31, 2018. File Copy 1 with your state’s tax/revenue department and send Copy 2 to recipients (non-employees) to file with their respective state tax returns.

Copied out yet?

Many states participate in a program in which the IRS will electronically send 1099-MISC information to the state, but check this list to see if your state requires you to file with your state separately. Hang on to Copy C for your own records.

How long will the filing process take?

The time it takes to get your 1099-MISC forms sent to non-employees and filed with the IRS depends on how well you prepared throughout the year (LUCA takes care of this for all of its clients). One way to better prepare is to request W9s from new non-employees before you pay them for their services. Some accounting systems have a feature that will track 1099 payments for you throughout the year, so that they are already calculated and easily reported when the time comes.

What information do I need to collect before filing?

You need to collect a W9 form from independent contractors for whom you must file a 1099-MISC. The W9 contains the recipient’s address and taxpayer ID. If they don’t have a taxpayer ID number, then you might have to start withholding taxes from their earnings. You also need to know how much you paid each independent contractor.

Ways to submit Form 1099-MISC

You can file both Copy A and Copy B of the 1099-MISC form in one of two ways: electronically or physically. If you decide to file electronically, you have until April 2, 2018 to submit them to the IRS.

If you want to email Copy B to non-employees (independent contractors), there are helpful services like Track1099 that will do so for you at a nominal cost. However, they still must be sent by January 31, 2018.

If you submit 1099s physically (by mail) to the IRS, you must also send in a Form 1096 (transmittal form), which is also due by January 31, 2018.

What are the basic steps to filing the 1099-MISC form?
  1. Determine who you will have to file for by searching for all payments over $600 and then filtering according to IRS guidelines
  2. Gather W9 information
  3. Fill out Copy A and Copy B of the 1099-MISC for respective independent contractors
  4. Submit to IRS, independent contractors, and state (if applicable) by the deadline

To save time with this process, you can work with a filing service who will do most of the heavy lifting. Or, you can work with a modern accounting back office like LUCA, who will make sure that all forms are accurately completed and timely filed.

Want to learn more about partnering with LUCA? Our team would love to hear from you.