Prepare a 1099 for a Contract Worker

by Cynthia Myers; Updated September 26, 2017
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If your business pays more than $600 during the year to a worker who is not your employee, the IRS requires you to issue a 1099-MISC to that person or business. One copy of the 1099 goes to the contractor, and you must also supply the information on the form to the IRS.

Before You Start

The contractor should provide you with a Form W-9, which shows the identification number he uses to file taxes. This may be a Social Security number or a federal tax identification number. The W-9 also shows the legal name for the person or business and the address to which you’ll send the 1099. To complete the 1099 you’ll also need the total amount of all payments made to the contractor during the year.

Navigating the Form

Enter the contractor’s name, address and tax identification number in the appropriate spaces on the 1099. The 1099 form has spaces to list various kinds of payments, such as rents, royalties and other income. For contractors, you will enter the total of the payments you made in box 7, Nonemployee Compensation. If the IRS required you to withhold taxes from the payments made to the contractor, enter the amount of taxes you withheld in box 4, Federal Income Tax Withheld. You are required to withhold income tax for contractors only if they have not furnished you with a tax identification number or in certain cases in which the IRS notifies you of a requirement to withhold taxes. If you live in a state that requires you to file a 1099 with the state, complete boxes 16, 17 and 18.

Sending the Form

Send Copy B and Copy 2 of the 1099 to the contract worker by Jan. 31 of the year following payment. For the 2014 tax year, the deadline is Feb. 2, 2015, because of the weekend. File Copy A of the 1099 with the IRS by Feb. 28 (March 2, 2015, for the 2014 tax year) or March 31 if filing electronically.

About the Author

Cynthia Myers is the author of numerous novels and her nonfiction work has appeared in publications ranging from "Historic Traveler" to "Texas Highways" to "Medical Practice Management." She has a degree in economics from Sam Houston State University.

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