How to Supply a 1099 for Contract Work
If you work full-time for a company and you have benefits, chances are that you are considered an employee and you will receive a W-2 statement at the end of the year that provides you a synopsis of the money you’ve earned and the taxes that have been withheld. If you perform contract work for a company, you are not considered an employee and instead of a W-2, you will receive a Form 1099 at the end of the year. Because taxes are not withheld for contract workers, the Form 1099 will explain how much money you have earned during the year. Only contract work that exceeds $600 requires a Form 1099-MISC. Accordingly, if you hire a contract worker for a project, you will need to provide a Form 1099-MISC if you pay him $600 or more.
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Things You'll Need
- Blank Form 1099-MISC
- Contact information for your contractor
- Social Security number or Taxpayer Identification Number for your contractor
Instructions
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Determine how much money you paid to your contractor during the calendar year. If compensation paid was equal to or exceeded $600, you will need to prepare a Form 1099-MISC. If compensation paid to a contractor was under $600, then a Form 1099 is not required.
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Complete the boxes requesting your (the payer’s) name, address and telephone number as well as Individual Taxpayer Identification Number (ITIN) (which may be your Social Security number).
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Complete the information requested on the Form 1099 for the contractor (the recipient), such as name, address, ITIN or Social Security number.
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Include the total amount you paid to the contractor on box 7 of Form 1099-MISC. Note that there are special payments that would be included in other lines, such as substitute payments in lieu of dividends or interest, but most payments for contract work would fall within box 7—nonemployee compensation.
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Tips & Warnings
The deadline to provide your contractor with a Form 1099 is January 31st. You must then send the same Form 1099 to the IRS by the following February 28th.
Certain tax software programs can produce these forms for you.
