IRS requests reports about all payments (if they exceed $600) any business makes to contractor workers during every tax year. This, as a rule, is done through a 1099 form filling. If you, as a small business owner, have faced the quest how to complete a 1099 form for your freelance workers, you’re going to find a thorough description right away.
Before we pass onto the detailed 1099 form instructions, it’s important to remind that you first need to gather the necessary and, what is more crucial, authentic information. Here are the necessary points:
- Your business info
To complete an IRS 1099 form, besides the name and address of your business, you’ll also need its Taxpayer Identification Number. Look for the latter in the latest tax forms or documents.
- Contractor’s info
The contractor’s info should be provided most accurately. For this, get a filled W-9 form he has already completed before doing the work. Here you can find the correctly written name, address, business name, and TIN.
- Payment info
For a thorough form, you’ll also need to state the money amount that you have paid to your contractor. But before this, you’d better crosscheck the sum mentioned in your records with that stated in the invoice.
Filling Out 1099 Form
So, once you have gathered the necessary data, it’s time to pass on completing the form. This is, actually, quite a straightforward activity and with this brief guide, you’ll end it in a couple of minutes. All the information you have is to be distributed into two boxes – the recipient’s and the payer’s. Here are the steps to follow for a precise result:
- Your information (name, address, contacts) should be inserted in the box located in the upper corner to the left.
- At the bottom of the previously mentioned box write your TIN. Depending on your business type, your TIN will be different. For instance, sole proprietors use their Social Security number. Other business structures, meanwhile are to use their TINs.
- Right beside the box where you mentioned your TIN, state the freelancer’s TIN.
- The next step implies inserting the freelancer’s contact information. This is to be viewed in the box under the TIN box.
- Afterward, you are to mention the account you have used in your business records. This is to be included in the box below the one described in the point 4.
- The 1099 form includes a box with a “2nd TIN not” mark. In case you’ve been twice notified about your freelancer stating the wrong TIN, you are to check the box.
- A 2017 1099 form also includes a few numbered boxes. Each of them is dedicated to a certain compensation type. If you’re completing the form for your freelancer, make sure you use the box number 7 for informing how much you have paid your freelancer. The latter is designed specially for a compensation to a non-employee.
Once all these points are strictly adhered to, you can confidently send the 1099 form to the IRS.