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What Is the Form 1099-MISC Used For?

Form 1099 for Miscellaneous Income is a legally-binding tax document commonly used in the U.S. This document is different from other tax forms as it is completed and sent by a business proprietor to a person who is not on their payroll. It takes place if the former has paid royalties in an amount up to more than ten US dollars or at least 600 US dollars for other income payments. The traditional list includes but is not limited to the following types of payments one receives. It is equal for a business owner and another individual as well:

There are other income payments one should report to the IRS if they exceed or equates to the above-mentioned amount. Nevertheless, even if an independent worker, such as a freelance translator or writer, receives less, they must not conceal their income from the agency and the local tax department.

Keep in mind that there are payments for which you do not need to issue the form: services that are not related to business. For example, if you hire a babysitter to look after your infant or a housekeeper to take care of your place of residence, you are not required to fill out the form. All these activities do not presuppose getting any benefits or profit, and that is why they do not require that you should report the payments. However, if you pay a housekeeper 700 US dollars to run houses that you lease to renters to profit from them, filling the form containing the information about the payment is mandatory. Besides, if you receive services from real estate agents or sellers of goods, filling out the form is unnecessary.

What Details Does the Form Contain?

Form 1099-MISC is usually sent in PDF format. At the beginning of the form, there are instructions regarding the procedure of filing this document. The form itself contains information about each detail both parties should provide so that they are unlikely to miss something out. The sections in the document normally include the following details:

It is also worth noting that the file consists of five copies. Each of them is to be distributed differently. The first copy (Copy A) is typed in red ink and is meant only for the IRS use. It means that you must not print it out. The “A” copy’s paper form is usually accompanied by 1096, giving information about the information return.

The other copies of the form are written in black, so you are allowed to print them. Copy 1 is usually sent to the freelancer’s state tax department. The recipient gets Copy B, while the payer is given Copy C. In some cases, Copy 2 is used by the recipient for state taxes. The employer provides all the afore-mentioned copies to an independent contractor and sends the necessary one to the IRS.

Frequently Asked Questions

When Should One File a 1099-MISC Form?

One thing you should avoid is delaying filing your form. Submitting the form at due time can prevent you from penalties. According to the instructions in the form, the payer must ensure that the IRS receives Copy A of the document by March 1, if you file it in a paper format. You have additional 30 days to send it via email. There is also a due date by which the recipient must get the form — by February 1. If payments are related to substitute one instead of dividends or gross proceeds to a lawyer, you, as a payer, will have a right to send Copy B to the recipient by February 16.

Can I Fill Out the Form In Handwriting?

Yes, you can. Although the agency allows it to be handwritten, you must avoid cursive letters as they can be hard to read. The most efficient way to complete the paper in handwriting is to write in block capital letters. However, we recommend you to fill out the paper online as you can correct typos immediately and ensure the details’ accuracy.