Did you pay an independent contractor $600 or more in the tax year 2015? If so, and if the contractor is a U.S. citizen or resident alien, you are likely to have to furnish IRS Form 1099-MISC, which is a statement of the income paid to the contractor.
For the IRS, Form 1099-MISC is a signaling mechanism to ensure taxes are paid on the income, as contractors are not usually taxed up front on earnings and either have to pay a quarterly or annual tax bill.
As the business, you must also obtain a completed W-9 Form from your vendor so you can complete your part of the 1099. The W-9 form will have the name, address and tax identification number (TIN) of the contractor to whom you are issuing the 1099-MISC. Per IRS guidance, the TIN is usually a contractor’s Social Security number.
It always makes it easier if you get this process going sooner rather than later, but firms still have time to comply with 1099 requirements. Per the IRS’s 2015 General Instructions for Certain Information Returns: “Generally, you must furnish Forms 1098, 1099, 3921, 3922, and W-2G information by February 1, 2016. Forms 1099-B, 1099-S, and 1099-MISC (only if you are reporting payments in box 8 or 14) must be furnished by February 16, 2016.”
Talk to a Plexus Groupe professional to find out more about how to file specific IRS forms by calling us at 847.307.6100 (Chicago) or 972-770-5010 (Dallas/Oklahoma City), or contact us via the Web at plexusgroupe.com.
Murray, Jean. “What is the Difference Between an Independent Contractor and an Employee?” About Money, December 16, 2014. General Instructions for Certain Information Returns. Department of the Treasury, Internal Revenue Service, 2015. Instructions for the Requester of Form W-9. Department of the Treasury, Internal Revenue Service, 2014.