How to file a 1099 for your contractor
As a business owner, you may have paid independent contractors for their services. In order to properly deduct those payments from your income on the tax return, you must file a 1099 for that contractor with the IRS and send your contractor a copy.
1099-NEC is the version of Form 1099 you use to tell the Internal Revenue Service whenever you’ve paid an independent contractor (or other self-employed person) $600 or more in compensation. (That’s $600 or more over the course of the entire year.) The IRS uses this information to independently verify your income, and therefore your federal income tax levels.
There are two copies of Form 1099: Copy A and Copy B.
If you hire an independent contractor, you must report what you pay them on Copy A, and submit it to the IRS. You must report the same information on Copy B, and send it to the contractor.
If you’re an independent contractor and you receive a Form 1099, Copy B from a client, you do not need to send it to the IRS. You report the income listed on Copy B on your personal income tax return.
Before you can complete and submit a 1099, you’ll need to have the following information on hand for each independent contractor:
The total amount you paid them during the tax year
Their legal name
Their address
Their taxpayer identification number (likely their Social Security Number, unless they’re a Non-Resident or Resident Alien)
The standard method for acquiring this information is to have each contractor fill out a Form W-9.
Copy A of Form 1099-NEC must be submitted to the IRS by January 31, regardless of whether you file electronically or by mail.
When you file a physical Form 1099-NEC, you cannot download and submit a printed version of Copy A from the IRS website. Instead, you must obtain a physical Form 1099-NEC, fill out Copy A, and mail it to the IRS.
Once your Form 1099-NEC is complete, send Copy B to all of your independent contractors no later than January 31.
(social video, have two members read through this information. Interview style with someone asking, “as a business owner, if you hired contractors, how do you deduct what you paid them)
