How Do I Fill Out a 1099 Tax Form?

All contract workers who you pay more than $600 during a calendar year must receive 1099 Forms.

A 1099 Form is a document you must provide to people who have worked for you during the course of the year but do not technically qualify as employees. Anyone who performs annual services for your company in excess of $600 must receive a 1099 Form. Recipients of 1099 Forms use them when filling out their own tax forms in order to verify payments they have received. You must also fill out a 1099 Form for any contract worker subject to backup withholding, regardless of the amount you paid them. Backup withholding is a deduction from a contract worker's earnings, which is required when he has not provided a required taxpayer identification number.

Things You'll Need

• Payment receipts
• Tax withholding information

Instructions

1. Provide each contract worker with a Form W-9 to fill out when she begins working for you. If she does not fill out and return the form, deduct 28 percent of her wages as backup withholding, according to IRS requirements.

2. Fill in the name and contact information on Form 1099 for the contract worker and also for your own business. Include your federal tax identification number. If you do not have a federal tax identification number and your business is a sole proprietorship, use your Social Security number. Use the recipient's taxpayer number from the Form W-9 that she provided when he began working for you.

3. Enter the total of the contract worker's wages over the course of the year, as well as the amount of backup withholding you have deducted.

4. Provide the contract worker with copies of Form 1099 for his own records, as well as copies for his state and federal tax returns by January 31 of the year following the calendar year he worked. Keep a copy for your records and mail the top (red) copy to the IRS by February 28.

Tips & Warnings

• Avoid mailing 1099s to contractor workers after the deadline. If you do not meet the deadline for mailing them, the IRS may fine you.

References

• IRS: Instructions for Form 1099 Misc.
• IRS: Form 1099
• IRS: Backup Withholding