Simplifying compliance for simple businesses...

What is

a Form 1099-MISC?

Form 1099-MISC reports miscellaneous taxable income to the Internal RevenueServices (IRS). The types of miscellaneous taxable income reported in a Form 1099-MISC range from gambling winnings to insurance payments. Most of these uses are reserved for specific instances; frequently large financial institutions.

Many small businesses hire 1099 contractors rather than W-2 employees, becausecontractors don't have the same withholding and reporting requirements, which saves business managers a time, effort, and money. The IRS modest reporting requirements for contractors is limited to a Form 1099-MISC per contractor earning over $600 during the tax year.

Why do I need

to file a Form 1099-MISC?

If you paid $600 or more in rents, services, contractors, or other payments of income, then the IRS requires a Form 1099-MISC issuance. Generally speaking, anybody paid more than $600 that isnʼt a W-2 employee, will require a Form 1099-MISC.

Some employers choose to file a Form 1099-MISC for contractors below the $600 requirement as well. This ensures all required forms are filed, and reminds contractors below the $600 cut to the income on their individual 1040 filings.

How do I file

a Form 1099-MISC?

Next year, tax year 2008, our simple web application will allow you to file everything digitally. For the current tax year 2007, you can file your Form 1099-MISC forms manually. Detailed IRS instructions are available, but the following steps outline the requirements.

The manual process:

• Collect the necessary information for each contractor.
• Order official 2007 forms through the IRS. Youʼll need one 1096 per payer (company) and at least one 1099-MISC per payee (contractor).
• Fill out a Form 1099-MISC for each contractor.
• Fill out a second Form 1099-MISC in special red drop-out ink for each contractor.
• Review and validate the information on each Form 1099-MISC is accurate and complete according to IRS regulation.
• For each payer (company), fill out a Form 1096 accurately totaling all of the payerʼs 1099-MISC forms .
• Mail the black ink Form 1099-MISC to each respective contractor before January 31, 2008.
• Mail the red drop-out ink Form 1099-MISCs and Form 1096 cover sheet for each payer (company) to the IRS before February 29, 2008.
• Within several weeks, the IRS will send you notification of any errors found.

• Collect the necessary information for each contractor.
• Enter the information, a single time, into our system before January 25, 2009.
• Receive electronic confirmation the 1099-MISC forms have been mailed, and optionally emailed, to the payees.
• Receive electronic confirmation the IRS has processed and accepted your forms.