graphic of form 1099 misc, miscellaneous income, tax basics

Tax Basics: Form 1099-MISC

This article was last edited on 12/19/2019. For updated information on Form 1099-MISC, visit https://www.irs.gov/forms-pubs/about-form-1099-misc. 

As a small business owner, you’ll file Form 1099-MISC, Miscellaneous Income, to report funds paid to independent contractors, if you paid them $600 or more during the year. You typically won’t withhold taxes from a freelancer’s checks, but the 1099-MISC form ensures that your worker and the IRS have accurate information about how much you’ve paid the contractor during the year. 

Things to consider when filling out Form 1099-MISC 

After you’ve entered your company’s address and Employer Identification Number (EIN), and your contractor’s name and address, you’ll need to complete a few more boxes on the form. 

  • Recipient’s taxpayer identification number (TIN) – You’ll need to enter your contractor’s Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or EIN. If you don’t have your worker’s TIN, you should ask them to fill out Form W-9 as soon as possible. 
  • Account number  The account number can be anything unique to the form’s recipient and cannot be located anywhere else on the form. So, you might choose to use a check account number or policy number, but you cannot use the worker’s TIN. If you’re filing multiple forms for one recipient, you’re required to enter an account number. The IRS also recommends that you include one on all forms you’re filing to ensure any future or corrected forms are processed correctly. Learn more about the account number. 
  • Box 7  You’ll enter the total amount you’ve paid your contractor in Box 7, Nonemployee Compensation.  
  • State info – Make sure to fill out the state info if your state participates in the Combined Federal/State Filing Program or if they require you to file copies of your 1099-MISC forms with the state tax department. Read also: Where do I send my state W-2 and 1099-MISC forms? 

If you’re filing 1099-MISC forms for your independent contractors, you’ll need to file them with the IRS and mail them to your workers by January 31. 

Do you have to file Form 1096? 

If you’re e-filing Forms 1099-MISC, you generally don’t have to file a separate 1096 form. If you’re filing by paper, however, you’re required to file Form 1096.  

When filling out the form, you’ll need to enter the total number of forms you’re mailing with Form 1096. You’ll also need to add up all the payments reported on your 1099-MISC forms and include the total on your 1096.