The first thing to know is that there is more than just one type of 1099 form, the most common being the 1099-MISC, which is used by freelancers, independent contractors, or interns. If you are a worker, you generally do not need to fill these out on your own as the person or company paying you or managing your investment account will send you a file already completed and ready for use. 1099 forms are issued by January 31st of each year, giving you ample time to use them in filing your tax return.
Those who are Exempt or Non-Exempt employees (sometimes referred to by laymen as salaried or hourly) will receive a W-2 form rather than a 1099 form. However, anyone who hires an independent contractor or freelancer must report wages paid to those workers on 1099-MISC forms. Therefore, this form is a critical component of any independent contractor or freelancer’s tax return, and you must file a 1099 even if you only received payment outside of salary or hourly pay for a single project during the year. If you fail to report this income properly, you may find yourself facing trouble from the IRS by the start of the next fiscal year – a problem which is easily prevented by reporting all of your income via W-2’s and 1099’s.
Other 1099 Forms
There are additional 1099 forms issued each year on an individual basis, including the 1099-DIV to people who have investments which earned dividends; the 1099-G issued by the government for those who received unemployment benefits; and a number of others. Unless you meet highly specific criteria, you need not worry about receiving these, and should focus on your 1099-MISC to ensure that your taxes are up to date and fully filed as per IRS requirements. You have until April 15th to file your taxes, but employers are required to issue your form no later than January 31st, leaving you plenty of time to get your taxes prepared and filed without delay.
Further Information on Who Receives a 1099
It is generally required that a 1099-MISC be issued to any and all persons to whom an employer has paid one or more of the following: a minimum of $600 in rents, prizes, services, or awards. In addition, employers will need to issue a 1099 in the event they pay a minimum of $10 in royalties or broker payments instead of dividends of tax-exempt interest, or if they paid gross proceeds to an attorney. Additionally, anyone who directly sells a minimum of $5,000 of consumer products anywhere other than a permanent retail establishment, or withheld federal income tax using the backup withholding rules, is also required to issue a 1099-MISC to all qualified persons.
In addition to sending the appropriate 1099 forms to all eligible persons by January 31st, an employer must send the form to the IRS by January 31st. Some deadlines differ from one state to another, and it is important that employers double check the final date by which 1099 forms and other tax documents are due.
Workers, if you suspect that you will receive a 1099 form this year, it is imperative that you update the company or employer who hired you with your current phone number and address so you don’t miss receiving this form in time to file your taxes.