The IRS requires you to fill out a 1099 if you are a contract worker that has made over $600 during the year. This includes any business or trade payments including money that you might have given to a contract worker for parts or materials. You cannot give these forms to employees of your company, only those that have been brought in to manage a specific task. Filling out this form is relatively simple, but if you are new to the process your regular tax preparer can provide you with some advice regarding how to proceed.
Completing the Basic Form
You can find copies of the forms you will need directly from the IRS (http://www.irs.gov/) on the ordering page of the official website. You can also usually get forms from your local CPA if you are unsure about how to find the correct forms online. Any forms you use will need to be compatible with the scanners used by the IRS to ensure that they will be able to get your information easily.
Once you have the correct forms you can enter your federal tax ID in the specified box. In most cases this will be your Employer Identification Number but those that are self employed may use their social security number. Then you can fill out any identification you have for the workers. This should be available on their W-9 that they provided when they began their contract. If you did not issue a W-9 you will need to withhold taxes on behalf of your workers. Once you have identified your workers you can fill out box 7 with any money you paid this worker throughout the year.
Withholdings
Like any other standard itemized form you will need to note any taxes you withheld on the part of your employees. If your employees did not provide you with accurate information such as a social security number or W-9 then you will need to withhold 28 percent of your pay. This increases to 30 percent for those that are not US citizens.
Sending in Your Forms
Your 1099 forms are due no later than January 31 and a second copy by February 28 of the following tax year. If you do not get your forms in by this time you will face a penalty. You will need to send a copy of the home tax revenue for all contract workers by February 28, though this requirement is dropped if the income tax was not deducted in the state where your worker lives.
Getting Help
If you have any questions about what is required of you to manage these forms you should contact a tax firm before they are due. The longer you wait to get help the less likely it is that a tax specialist will be able to help you in a timely manner. Do not risk getting a penalty because you are trying to get information that would help you avoid costly mistakes later.