Unsure of whether you need to file a 1099 form with the IRS? 1099-MISC is the IRS’s biggest tool in their fight against self-employed individuals underpaying in taxes. If a hiring firm does not file a 1099 when necessary, they could incur monetary fines. To avoid getting fined, let’s talk about who gets a 1099 and how to file it with the IRS.
Who Gets a 1099 Form?
The 1099 form is a tool for reporting certain types of non-employment income to the IRS. This can include pay you received from an independent contractor or dividends from a stock. Businesses are required to distribute them to any non-corporation payee who receives $600 or more throughout the year.
You might be wondering, “How much taxes do I pay on 1099 income?” Self-employment taxes (including Social Security and Medicare) come out to around 15.3%. Remember, self-employment taxes are assessed based on net income, not gross.
How and When to File a 1099
Wondering how to file a 1099 MISC with the IRS? Different forms have different due dates, and 1099-MISC should be received by your issuer on Jan. 31. As the receiver payee, you do not send the 1099-MISC to the IRS. They often get their copy of the form a little bit later than you.
What does a 1099 look like, and how do you spot errors? The 1099 form will look like this example, clearly listing the year and type of 1099 in bold at the top right-hand corner. The type will also be listed in bold in the lower left-hand corner. It will include the payer’s name and address, the recipient’s name and address, income earned or compensation (something you will see on 1099-NEC), and information on federal and state taxes withheld.
If something looks erroneous, you need to report it to the payer immediately. They might have time to correct it before sending it to the IRS.
Types of 1099 Forms
What is a 1099 form used for? Quite a few things, actually. There are 20 types of 1099 forms as of July 2021, including:
1099-NEC was introduced in the 2020 tax year for reporting non-employment compensation. 1099-MISC can be reserved for any income that falls outside the boundaries of other 1099s (such as prize winnings).
What to Do If You Haven’t Received Your 1099
If it is getting down to crunch time with filing tax returns and you still haven’t gotten your 1099, contact the payer. Let them know you have missing documents. If you do not get the 1099 in time, you will have to file the tax return by that year’s tax filing date.
Even if you don’t get the form, you are still responsible for paying taxes. The IRS will send you a bill saying you owe taxes if they get the form from the payer, but you do not. Contacting a tax professional to fix issues with 1099 forms is often necessary, but can be time-consuming.
Do not hesitate to use our services like the Paystub Generator. And, in the near future, we will be adding W-2 and 1099 generators to meet your needs as a business owner. PayStubs365 can keep you and your business on track for getting forms filed to the IRS.