After contracting or having provided freelance services, there is need to have accurate tax reporting. It is good to understand the concept of the 1099-MISC form prior to doing that. The 1099-MISC form is a document that gives the information of the payments that are made to a person which the IRS may consider as a non-employee to a particular organization.Such People may be Freelancers, services providers or any independent contractor. To the three parties involved, the form is vital in that it assists business owners and people who source for services elsewhere as proof of payments to the said services. Also, when it comes to keeping track and reporting the revenue of tax returns of the company or the individual after paying for the services, the form is very important. Therefore, the IRS uses the information given by the 1099-MISC form in making sure that income reporting is done accurately.Below are some of the things you need to take note of the 1099-MISC form.
It is vital to understand when to use the form. Having services provided by a company or an individual which is not an employee, the form should be sent to them. The sending of the form should be done at the end of the first month of every year concerning the job that was done the earlier year. The parties that receive the copies of the forms are the IRS and the independent contractor who provides services. These forms can only be received by people who own a business or incorporated contractors.However, there is a minimum amount a service provider should be paid for them to receive the form. The amount one needs to be earning should be 600 dollars and above otherwise those who earn less than that cannot receive the form.Also when purchasing goods or any merchandise, the 1099-MISC forms are not included. Only at the instance of a service being offered that the form applies.
Knowing how to file the form is the other thing to note.The Contents of the 1099-MISC include the recipient’s personal details as well as all the payments covered. It is required of the recipient to file the form when sent by the client.Hence, The need to understand how to file the 1099-MISC form since it is different from other employee forms. For the income that is more than 400 dollars, the IRS requires every self-employed individual in this category to report the income.
To the non-employee, there are some tax benefits when they have the form. The freedom of claiming a deduction related to the business is among the benefits that a non-employee get which is impossible to an employee.