All independent contractors who did work for you or your business during the previous tax year must be sent a 1099-MISC form. This requirement only applies if the contractor was paid more than $600 during the year, and if he did work for you in the course of your trade or business. In other words, neither an individual who landscaped your home nor a lawyer to whom you paid $300 need to be sent a 1099 Form, but an accountant who did financial work for your business and was paid in excess of $600 must be sent one.
Contact the IRS at 800-TAX-FORM (800-829-3676) to request blank 1099-MISC forms. The form you use must have special IRS machine-readable magnetic codes embedded in the form, so copies printed from the Internet will not work. IRS offices, CPA offices or office supply stores may have some available for you to use. You need one 1099-MISC form for every independent contractor you paid that year.
Write your business name, business tax ID number, the contractor's name and contractor's tax ID number--likely her Social Security number--on the 1099 Form. Write the amount paid to that contractor over the course of the year in Box 7 labeled "Nonemployee Compensation."
Mail or give copy B of the 1099-MISC Form to the contractor by Jan. 31 of the year the tax payment is due. For example, fees paid to contractors in 2010 should be reported on the 1099-MISC and sent to the contractors by Jan. 31, 2011. Copy A is for the IRS.
Tips
If you are filling out 1099-MISC Forms for the first time, you may want to consult an accountant for assistance. The accountant can also help you remember other contractors that you may have forgotten about who also must be sent 1099 Forms.
Warning
Incorrect, late sent and unsent 1099-MISC Forms carry a financial penalty per form.
