How do I print a 1099?
In general, if you hired a contractor or freelancer and paid them more than $600 in a year, you’re responsible for issuing them a 1099-NEC for nonemployee compensation. In other words, the payer fills out the 1099.
Beginning in 2020, IRS Form 1099-NEC replaces the non-employee compensation payment reporting on Form 1099-MISC for more than 30 years. All businesses now must issue and file a Form 1099-NEC for non-employee compensation if all of the following conditions are satisfied:
- You made the payment to someone who is not your employee
- You made the payment for services in the course of your trade of business, not products
- You made the payment to an individual, partnership, or other unincorporated entity (payments made to a corporation including an LLC treated as a C or S corporation generally do not need to be reported except for payments to attorneys that are corporations)
- The payments made to the payee were at least $600 or more for the current year
If federal withholding exists on any non-employee compensation payments made to a recipient, you must prepare a Form 1099-NEC to report it even though payments were less than $600.
For the 2020 tax year, Form 1099-NEC is due to the Internal Revenue Service on Monday, February 1, 2021. Copies of Form 1099-NEC are due to recipient individuals or businesses by February 1, 2021 as well.
How to prepare a 1099?
The first thing you need to do to prepare a 1099 is that you make sure you have all the correct information on your contractors or vendors. Vendors should have already filled out Form W-9 and provided it to you when you engaged their services. In other words, having contractors fill out a W-9 should be one of the first administrative tasks you complete after hiring them. A Form W-9 includes their name, address, and social security number (SSN) or Employer Identification Number (EIN). The W-9 also includes their tax filing entity, so you can know if you need to issue a 1099 for those vendors.
Information you need before completing a 1099 is as follows:
- contractor’s SSN or EIN
- the total amount you paid them during the year
- contractor’s legal name
- contractor’s address
Once you’re provided with forms W-9 from your contractors, start filling them out with your federal Tax ID number, the amount of money paid to the contractor, which will be entered in Box 1 under the title “Nonemployee compensation”. If you withheld any pay from your contractor (e.g. backup withholding), you will also need to fill in Box 4 or Box 5 for federal or state income tax you withheld.
The next step as a business owner is to send out the tax forms to the contractor and to the IRS. You must send the form, specifically, a Copy B of form 1099-NEC, to the contractor no later than February 1st. If you miss this deadline, you will be ending up with paying the IRS penalty for late submission and your contractors will end up paying and filing their taxes late. You will also mail (or electronically file) Copy A of each Form 1099-NEC and form 1096 to the IRS no later than February 1st. A Form 1096 summarizes the totals from your contractor payments and the IRS uses Form 1096 to track every physical 1099 you’re filing for the year. Keep in mind that you retain Copy C for your own records.
How do I print a 1099?
If you have your own accountant or payroll service, you can have them to generate the proper forms and send out these forms. However, if you’re willing to do it yourself, you can use the following options for filling out and issuing a Form 1099.
- You can order physical, blank 1099 forms from the IRS for free, but it may take 10 to 14 business days or longer to arrive -
- here is the IRS.gov link
- make sure you order 1096 Forms as well.
- You can order physical, blank 1099 forms online or from an office supply store. If you use this kind of online store website, you can actually order other things like envelopes. You can get it with the printing software as well.
- You can use a 3rd-party online service where you fill out the information online and they’ll create a PDF for you. You will still need to print form 1099 out and mail it to your independent contractors, but they will e-file the information to the IRS.
Please be sure that you CANNOT use the blank 1099 forms that you find online.
Tips for accurate and efficient Form 1099 reporting
Am IRS tax Form W-9 is used to obtain your contractor’s information such as name, address, taxpayer identification number (e.g. social security number, employer identification number) so that a Form 1099 can be issued. You need to ensure that a Form W-9 is on record for every recipient of a payment. Additionally, having an accurate information up front will prevent you from amending the 1099 forms due to incorrect or incomplete information. If the W-9 is not received by the time of any payment, 24% for backup withholding must be deducted.
Penalties for missing the fling due date
If you don’t file a Form 1099 to the IRS by the deadline, you will pay a penalty depending on how late the payment is in the calendar year. These penalties are:
- $50 if you file within 30 days
- $100 if you file more than 30 days late, but before August 1
- $260 if you file on or after August 1
The amount will be determined based on when you file the correct information return. If you are unable to file on time, you can request an extension by submitting Form 8809 to the IRS. However, you will still need to provide the 1099-NEC forms to any contractors by January 31.
Prior to 2020, you either issued or received a Form 1099-MISC if your business hired contracted work or if you were a freelancer. Starting in 2020, the new Form 1099-NEC has been introduced to only report non-employee compensation income. The due date to file Copy A of Form 1099-NEC with the IRS is January 31 of the following year. If this date does not fall on a business day, the deadline will be the next business day. Similarly, the due date to provide Copy B of Form 1099-NEC to contractors is January 31 of the following year. Some states require you to also file 1099-NEC with the state. There is a penalty if you missed the deadline and it depends on how late the payment is. Check the IRS website for more information.
If you're preparing a Form 1099 tax return yourself, there are several options you can use for filling out and issuing a Form 1099 as discussed above. Please remember one thing that that you CANNOT use and fill out the blank 1099 forms that you find online. Good luck with generating and issuing your 1099s for the year-end!