The Internal Revenue Service uses the form 1099-MISC to trach miscellaneous income in a business. If you are a small business owner, the IRS uses this form to track all payments that you made to independent contractors. An independent contractor is anyone you hire to do a service for you on contract.
For instance, if you outsource a web designer or a copy writer then that is an independent contractor that you pay. If you hired and independent contractor in that particular year, that is the only time you need to file a form 1099-MISC. You should not file a form 1099-MISC for your employee, they have a wage file for themselves so do not misclassify your employees for there is a penalty.
The easiest way to file a 1099-MISC is through the online channel. You will be guided through the process of filing taxes on the site. To file the 1099-MISC form, the first step that you take is to gather all the needed information. The information includes, the amount you paid the independent contractor, the contractor’s legal name and address and the tax identification number. You can have the contractor fill out a W-9 in order to get the needed information. Go through your account books thoroughly to make sure all info is correct.
When filling a form 1099-MISC, there are two copies which are copies A and B. The independent contractor should be sent copy B of the form while copy A should be the one submitted to the IRS. It is a requirement to fill out a 1096 form if you are physically dropping off your form 1099-MISC. Another requirement is that you put the state in which your business is located. Since there is a penalty for late filing of returns, hitting deadlines will help you avoid that.
Filing returns physically and online differs a little when you are filling the form 1099-MISC. You need a FIRE system in order to complete the whole filing process. After filling out copy A of the form 1099-MISC in that way, you then mail it to the IRS. Make sure to email the copy B to the independent contractor.
Make sure to ask for consent from the contractor even before you email the form 1099-MISC. There is a system used to ask for consent from the contractor before you email in order to show the IRS. You have to comply with the IRS rules and have all the requirements when sending the email. You can thereafter send copy B of the form 1099-MISC when the contractor responds by giving you consent.
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