Posts Tagged ‘w 2 wages’

When Should You Submit 1099 Forms?

June 3rd, 2013 2 comments

1099 forms are a type of information return that record different types of taxable income. The Internal Revenue Service requires 1099 forms to be submitted before the end of the tax year to both the IRS and the payment recipient(s). 1099 forms are used to report non-wage payments, or payments that are not considered W-2 wages, and several other types of payments and income.

There are several circumstances in which a person or business should submit a 1099 form to the IRS and payee. The 1099-MISC form covers many types of payment while other variants cover other specific types of payments that the 1099-MISC does not.

For most payments that the 1099-MISC form covers, the minimum amount necessitating reporting is $600 or more. However, there are exceptions including any substitute dividends, royalty payments, and tax-exempt interest that are more than $10. Any payment to attorneys, members of a fishing boat crew, or payee subject to backup withholding must be reported on a 1099-MISC form. If a person or business has paid a doctor, accountant, or other professional $600 or more for consultation or services, they should submit a 1099-MISC form to both the service provider and the IRS.

Some of the other payments that require a variant of the 1099 form include any interest income, distributions from IRA and pension plans, distributions from medical and health savings accounts, barter exchanges, and others. Since there are a wide variety of payments that require a 1099 form submission, it is best to call the IRS or check their website whenever there is a question about whether or not a 1099 form should be submitted.

Any payment to a freelancer or contractor that is more than $600 must be reported with a 1099 form. A potentially difficult part of the process of information reporting is determining whether a hired worker is considered by the IRS an employee or contractor. In the case that the worker qualifies as an employee, a W-2 form would be submitted to the employee and IRS. If there is a doubt, an IRS Form SS-8 may be submitted in order to receive an official decision by the IRS on the classification of the worker.

As a general rule, 1099 forms must be submitted to the taxpayer by January 31st, and to the IRS by February 28th. The form may be submitted to the IRS electronically to save time.  If a business or individual has 250 or more 1099 payees in one calendar year, the forms must be submitted electronically to the IRS.

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