Filing Form 1099 – USA

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The Need for Form 1099 MISC

It is mandatory for taxpayers to fill Form 1099 MISC regardless of the income they earn in a tax year.

Filing Form 1099 – USA: Form 1099 covers royalties, rent, self-employment or independent income, insurance, and other miscellaneous incomes. In short, it gives a report on the year-end compensations given to all non-employees.

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Who needs to be given Form 1099?

There are certain different forms for different individuals Internal Revenue Service (IRS) states which an independent contractor, sole-proprietors, freelancers, etc need to report. A business or a client who pays miscellaneous incomes to individuals on their services needs to issue Form 1099 MISC.

A client is required to generate Form 1099-MISC if the amount paid to the non-employee is more than $600 during a tax year. If the amount is less than $600, no form is required to be filed. Also, as per IRS a client has to issue Form 1099 to the non-employee by 31st January of the following year and has to file a copy of the same to IRS by the last day of February or March (as per the guideline.) It’s noted that this form does not include personal payments.

The need for W-9 Form:

Form W-9 contains all the information about a non-employee, like his/her name, address and taxpayer’s identification like his/her Social Security number. It also has the Foreign Account Tax Compliance Act (FATCA) code and US citizenship mentioned as well. A client must get this form before generating Form 1099-MISC as per IRS.

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