What is a 1099 Form?

1099 forms are Internal Revenue Service (IRS) documents that provide information to taxpayers about income other than wages, salaries, and tips that must be reported on the taxpayer’s income tax return. The IRS issues different types of 1099 forms, each designated for a different type of income. The 1099 form category has 10 distinct types, each of which is distinct in terms of its purpose, information provided, and reporting requirements.

Who is Responsible for Issuing or Filing 1099 Forms?

The person or entity that pays an independent contractor or other recipient of non-employee compensation must prepare, sign, and issue an appropriate 1099 form to the recipient. Additionally, the payer must provide a copy to the IRS. For example, if you’re a business that paid $600 or more to an independent contractor over the past tax year, you must supply the contractor with a tax form 1099-MISC (Miscellaneous Income) by the end of January, 2021.

Filing Deadlines for 1099 Forms

Payers are generally obligated to issue 1099 forms to the worker by January 31 and to file the forms with the IRS by the end of February for paper filing, or March 31 for electronic filing. Non-compliance carries significant penalties, usually calculated from the date when the payer should have issued 1099 forms to contractors.

It’s important to file 1099 forms properly and on time by following IRS regulations and procedures. If you have employed contractors over the past tax year, you have likely become familiar with 1099 forms. If you’re someone who has received a 1099 form, you might be wondering how the 1099 form affects how you’ll pay tax on your income. As always, it’s best to get in touch with an accountant for further guidance.