If you are currently working as a self-employed individual or as a freelancer, then there is a 100% chance for you to get a 1099 form. It is necessary for a company, that is hiring you to report tax information. This includes an accurate information about how much a company has paid you during a specific period of time (one tax year). There is a widely used W-2, that has to be completed by all the employees of the company. 1099 form is an alternative one for those, who work as non-employees.
Why should I fill out a 1099 form?
Internal Revenue Service requires to complete 1099 form those, who collaborate with the companies as an independent contractor or perform specific services for an organization rather than being a constant employee. This means, as independent worker you are able to control what you are working on and how it may be done. An organization. you work with may only monitor or check the result of the work you have performed. This document works, for example, for drivers, who work for a ride sharing companies, for graphic designers, landscapers, social media consultants, etc.
1099-MISC Form Sample
How to report taxes with a 1099 form?
So, according to the information mentioned above, while working independently you may receive at least one 1099 once a year. IRS requires United States organizations to distribute this document among their independent contractors no later than on January 31st. There should be indicated information regarding the income paid to each worker over the prior year. It is very important to know, that in case an organization paid an independent worker less than $600 over the course of the year, they don’t have to send a 1099, but a freelancer still has to report his or her income.
How I pay taxes with a 1099 form?
Any institution has to pay a percentage of their employees’ salaries for taxes. That’s why they may withhold an amount from the payments and wages. In case you work independently, you have to pay these taxes fully. However, if you owe IRS $1,000 or more for the current tax year, you may have an ability to send the required payments quarterly. To divide the paying process, assess your tax liability using as a basis the most recent quarter. For this purpose find a 1040-ES.
How to complete a 1099 form?
A 1099-MISC fillable form is available in the PDFfiller online library. It is easy to find searching on the website. Then you are provided with an ability to fill this document online by a single click. Indicate the following:
- the receipent’s personal data, including the name, address and his or her telephone number;
- your business’s TIN or Social Security number (only in case you are a sole proprietorship);
- recipient's identification information;
- an account number of a recipient;
- mark the box “2nd TIN not.” in case, you have provided an incorrect tax identification number during the last three years. It is necessary to inform IRS, that now you provide true and accurate data and they don’t need to send you another one notification.
To learn more about the form 1099-MISC, please watch the following video: