A 1099 is a tax form required by the United States Internal Revenue service for those individuals who have established themselves as independent contractors. An independent contractor is a person who works on a contractual, and not on a salary, basis with a company and is usually considered self employed. There are many types of 1099 forms, including the 1099-A, 1099-B, 1099-MSA, but those who employ independent contractors only need concentrate on the 1099-MISC form which should be filed if the individual has earned $600 or more in your services. Filing one is relatively straightforward, with detailed instructions included with the form.
Download the form from the IRS.gov website. There are many pages dedicated to the filing of the 1099, and a self-employment center which will guide you through the process.
Find your Employer Identification Number -- or EIN. If you do not know your Employee Identification Number, call the IRS Business and Specialty Tax Line at (800) 829-4933 and ask for help in locating it. Oftentimes, your Social Security Number will double as your EIN.
Enter the workers' social security numbers and the amount of compensation you paid to the independent contractor. This will be entered in box 7 on the form.
Enter any withheld income tax on the form (although most independent contractors are responsible for their withheld taxes.)
Fill in all the pertinent information and send a copy of the 1099 to the contractor no later than January 31 of the next year. These copies will include copy B and copy 2.
File copy 1 with the contractor's state tax department. The exception to this is states that do not have state income taxes such as Tennessee. You can easily upload the 1099 to the state's tax income commission. To find the information, search for "file 1099" along with the state's name in a search engine. This will lead you to their upload site and you will be done quickly.
Fill out the additional form 1096 and send this along with Copy A to the IRS. You can mail or upload these forms to the IRS at their website. Deadline for filing the paper copy is February 28, but if you file electronically, the deadline is the end of March.
Retain Copy C for your records, and make sure it is filed where you can locate it easily for future reference.
Make sure that your contractor truly qualifies for independent contractor status. The IRS can be quite rigorous in regards to independent status. Read the online guidelines and file carefully.
Lawrence Koenig has been a technical writer since 1988. His expertise includes the U.S. military, hospitality and transportation industries. Koenig holds a Bachelor of Science in literature from Oral Roberts University and he is pursuing a Master of in Education.