1099 Independent Contractor

Successful American businesses may require many types of support and advisor services in addition to an employee base. Whether or not a worker is an employee or a true Independent Contractors (I.C.) is determined by evaluating a list of control factors. These factors may be based on certification and licensing, the location and or method that the job is assigned, whether or not the I.C. has the ability to bring on their own support, separate from the employer, to complete the job task.

Many independent contractors are brought on board to address specific projects that require specific skills, not available in house. The I.C. is able to maintain control of the contract, the scope, the method with which the job is completed, as well as many other factors.

When relying on Independent Contractors to get the work done, businesses still need to report payments made for the labor contracted. A Form 1099-MISC is issued by the business owner to report miscellaneous income paid to independent contractors and service providers.

What type of income do I report on a 1099 form?

The 1099-MISC should be used for reporting payments to independent workers — not payments to employees who receive a W-2 Wage Statement.

Independent workers are typically self-employed individuals or small service firms that are hired as independent contractors. Examples of independent contractors might include a graphics designer, website developer, bookkeeper, cleaning service, freelance writer, or other self-employed providers. The Form 1099-MISC is also used for reporting payments made to unincorporated business service providers, attorneys, and landlords.

What is the $600 threshold?

A 1099-MISC reporting form for an independent contractor unincorporated business is required if you paid that independent worker or business $600 or more in a calendar year. If the amount you paid the contractor totals less than $600 for the tax year, then you are not required to issue a 1099 form.

There are special threshold rules for reporting certain other types of payments, such as payments made to attorneys, fishing boat proceeds, and sales of consumer goods for resale. Review the IRS 1099-MISC form instructions or speak to your tax preparer regarding these special situations.

What are the deadlines for sending form 1099?

February 2, 2015 is the deadline for furnishing the 1099-MISC forms to independent contractors and service providers you paid money to in 2014. Mail a copy of the 1099 form to the independent contractor or service provider by that date. Normally the date is January 31 of each year. However, when the 31st falls on a weekend, the date is extended to the next following business day.

March 2, 2015 is the deadline to file the 1099 information with the IRS if you file by paper. That date is extended to March 31, 2015 if you do electronic filing of 1099s.

Depending on state law, you may also have to file the 1099-MISC with the state. There are different dates for certain other categories of payments such as payments to attorneys. Consult the Form 1099-MISC instructions for dates for these special other situations.

Do I need to issue a 1099 to a foreign worker?

If you hire a non-U.S. citizen who works remotely via the Internet from another country, generally speaking you do not need to file a 1099 for that person. However, if the foreign worker performs any work inside the United States, you would need to file the 1099.

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Are you in search of more information on 1099 forms? Here at Accuchex we have extensive experience with 1099 forms and independent contractors in San Francisco, California. We service the California Bay Area – including North Bay, South Bay, East Bay, and San Francisco. Connect with us to learn how we can help you.