Form 1099-MISC is used by business owners to report income paid to an individual. A 1099-MISC must be sent to the individual so he can report the income on his taxes and a copy must be sent to the IRS as a record of the income he received. California doesn't require that you file a 1099-MISC form if you file information returns electronically using the IRS Combined Federal/State Filing Program or if you submit paper returns. The IRS automatically shares the information. If you file electronically without participating in the combined program, however, you must mail a separate copy to the state.
You must issue Form 1099-MISC to any individual or independent contractor to whom you paid at least $600 for:
- income payments
Don't issue a 1099-MISC for personal payments, only payments you made in your business or trade.
Completing the Form
You can purchase 1099-MISC forms from office supply stores or order them directly from the IRS. Complete each form by entering the legal name of your business or trade and your business's federal identification number. Enter the recipient's full name and identification number. Report the total payments on the appropriate line, such as non-employee compensation on line 7. The form has multiple parts. Copy B and Copy 2 are for the recipient. Copy A must be sent to the IRS. Copy C is for your records. Copy 1 is for the state. Only mail the copy to the California Franchise Tax Board if you're filing electronically without using the IRS combined program.
Filing Form 1096
You must complete and mail Form 1096, Annual Summary and Transmittal of information Returns, to the IRS. The form is a summary of all the 1099-MISC forms you've filed. You can mail it to the address listed on the instructions. If you've sent out 250 or more 1099-MISC forms, you must submit your 1096 electronically.
The 1099-MISC forms must be mailed to your vendors by January 31. If you're mailing the forms to the IRS, send them out no later than the last day of February. If you're filing electronically, you can submit the forms by March 31. California uses the same filing deadlines as the IRS. If you don't send the form out by the required deadline, you can face penalties based on how late you are.