The first thing to know about how to file form 1099-MISC is that it’s a lot easier and more reliable when you have a software solution from Advanced Micro Solutions (AMS). The best way to see what our software resources are capable of is to download our free demo. Our clients include independent business owners, small but growing companies, and third-party accounting professionals who serve these businesses. But if you’re starting out, here’s a step-by-step overview of what to expect as a payer/employer during the 1099-MISC filing process.
How to File Form 1099-MISC: A Step-by-Step Guide
1. Start Your Information Gathering Early: In one way at least, the steps for how to file form 1099-MISC are going to start as soon as you hire a business firm or service professional to do at least $600 worth of contract work. Use the w-9 form to verify the contractor’s basic tax information, including mailing address and tax id number. This is important because it does no good to meet the first recipient filing deadline if you send the 1099-MISC with the wrong information and/or to the wrong address.
2. Gather the Essential Information: The basic information to be included on all 1099-MISC forms is your business name, mailing address, and employer identification number, as well as the contractor/recipient’s name, mailing address, and tax identification number. And the total amount you paid out to the recipient that year. Know in gathering your end-of-year total payment amounts that you have some flexibility in how to file form 1099-MISC in terms of cutoff dates. You can separate the taxable returns into either when you invoiced the contract labor, or when you made the payments. But you’ll have to specify and the IRS prefers a continuity of accounting methods from one year’s returns to the next.
3. Mail Your Recipient 1099-MISC Forms: After double-checking the accuracy of your information, you’ll need to prepare, print, and mail Copy B and Copy 2 of the 1099-MISC form for the recipient’s own federal and state income tax returns, respectively. This must be done by the end of January. Don’t wait till the last minute to get this done, and don’t underestimate how missing this deadline or submitting inaccurate information can harm your business’s reputation with its contract labor, as well as potentially its good standing with the IRS.
4. File this Information Directly with the IRS: By preparing Copy A and Copy 1 of your 1099-MISC form with a software solution from AMS, you can e-file this information directly with the IRS/SSA. Many businesses choose to do this at, or around, the same time as mailing the recipient copy. However, you do have a little more time for this step if you need it. If filing by paper, you have until the end of February. If e-filing, you have until the end of March. (For multiple 1099-MISC filings, you’ll also want to complete form 1096 for compiling the information on all of the various 1099 forms.)
5. Complete Your Own Tax Returns: Having all the basic information from your various 1099 form filings also makes it easier to file your own end-of-year tax returns. You see, all these payments you’re making are likely a deductible business expense. As a matter of fact, you can’t take this deduction unless you first make the appropriate 1099 recipient filing.
If you still have questions about filing 1099-MISC or what software from AMS has to offer your business, don’t hesitate to contact us at (800) 536-1099.