One of the big reasons that even experienced business owners and accounting professionals seek out 1099-MISC instructions is contained in the name of the form itself: It’s a miscellaneous, remainder category for payments and distributions that aren’t already accounted for by other 1099 forms (1099-R for retirement plans, 1099-Q for education savings accounts, and 1099-S for real estate sales, just to name a few). Other easy-to-overlook exceptions include payments for freight, storage, telegrams, and telephones; payments made to or for homeowners from the HFA; military differential wages; and compensation for injuries or sickness by the DOJ as a public safety officer disability or survivor’s benefit.
For easy reference and more comprehensive guidance, you can find the IRS’s own 1099-MISC instructions here. With this in mind, here are some of the FAQs Advanced Micro Solutions (AMS) noticed from those who are new to the filing requirements associated with 1099-MISC and other 1099 business filings.
Who has to File a 1099-MISC?
While there are a bunch of exceptions and hair-splitting rulings on the different types of payments that may be made, by far the most common reason is payments made to an independent contractor. To this point, there are basic 1099-MISC instructions that dictate who must file the form for payments made to these contractors. The IRS lists four specific criteria, though we prefer to combine two of them for simplicity’s sake:
1. You made payments to the payee of at least $600 during the year.
2. You made these payments to an individual, partnership, estate, or corporate entity that is not your employee.
3. You made these payments for services related to your trade or business, including public agencies and nonprofits.
You can also find additional information about less common reasons for 1099-MISC filings—proceeds for fishing boats, attorneys, crop insurance, etc.—here.
What’s the Difference between an Employee and an Independent Contractor?
There are a range of factors that determine whether a payee is an employee or an independent contractor. Who controls the day-to-day course of the services rendered? Monthly contracts and standalone projects are more indicative of contractors. Daily input is more indicative of employees. Also, who pays for the collateral expenses? If the payer covers the cost of a computer, landscaping equipment, or other business supplies, this is more likely an employer-employee relationship. The same thing goes for health insurance benefits, vacation pay, and retirement plans. You can ask the IRS to render a judgment for individual cases, but the guidelines can be found here.
What is the 1099-MISC Filing Deadline?
There are hundreds of changes made to the tax code each year, and one recent change is a new filing date. Payers must file on or before January 31st, 2017, if you are required to report nonemployee compensation in box 7. If not, the filing deadline is February 28th, 2017 for paper filings, or March 31st, 2017 if you’re e-filing.
Where do I get 1099-MISC Forms?
The 1099-MISC form can be filed electronically or as a hard copy. If you request a paper copy, the IRS will mail it to you for free. The process will take around 10 business days. However, if you have a software tool equipped to file 1099-MISC, you need only electronically file and print a receipt.
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