Simple and quick process to file form 1099 misc for contract worker

If you are a small business owner and have hired the services of independent contractors/freelancers and paid them $600 and above as remuneration for their services, then there is no doubt that you have to file informational return form 1099 Misc. For each contractor that you hire and pay $600 and above, you have to file form 1099 misc.

Do not prepare a 1099-MISC for a worker who is your employee. This form is for non-employee compensation. You need to be aware of the rules distinguishing an employee from a non-employee. You have obligations to an employee that you must meet and that the IRS takes very seriously. Business owners will have to issue form W2 to employees for their income tax return.

Now, there are 2 processes to file form 1099 misc. One process is the paper filing method and the other method is the electronic filing method. Let’s discuss in details the steps to file form 1099 misc for each method.

PAPER FILING PROCESS TO FILE FORM 1099 MISC

• Determine you paid $600 or more to a contract worker during the tax year. Include only payments made in the course of your trade or business; personal payments are not included. Include payments made directly to the worker for parts and materials.
  
• Obtain form 1099-MISC. You can get the form from the nearest IRS office or from the IRS website. The form is titled "Miscellaneous Income."
  
• Write your business Employer Identification Number (EIN) or your Social Security number as the payer's federal identification number.
  
• Write the worker's Social Security number as the recipient's identification number.
  
• Write the amount of money you paid to the independent contract worker in box 7, titled "Non-employee compensation."
  
• Write any federal or state income tax withholding you have done for the worker inbox 4 or 11. It is unlikely you have withheld income tax for the worker.
  
• Fill in your name, address and phone number or that of your business.
  
• Fill in the worker's name and address.
  
• Write your state in box 12. Two-letter state abbreviations are preferred.
  
• Give or mail copy B and copy 2 of the 1099-MISC to the worker no later than January 31 of the year following the one during which the payments were made to the worker.
  
• Send copy 1 to the tax revenue department of the worker's home state by February 28. This is not necessary if that state has no state income tax.
  
• Send copy A to the IRS along with form 1096 by February 28.
  
• Retain copy C in your records.

Form 1096 is a summary of the information returns you are sending the IRS. Use only one form 1096 for all of your 1099-MISCs. You will need to include your name, address and phone number; your EIN or Social Security number; the total number of 1099-MISCs you are filing; the total of any federal income taxes you withheld for contract workers; and the total amount you paid to contract workers. Check the box titled "1099-MISC."

ELECTRONIC FILING PROCESS TO FILE FORM 1099 MISC

1. Register with the service provider whom you have selected for your1099 misc filing
2. Select the form, fill your information
3. Submit to IRS (1099 misc filing due date for efile is April 2nd 2012)

Now, that we have mentioned the filing process for both the methods, which one do you think is easy? Obviously, the electronic filing method, which is easier, quick and secure compared to paper filing. However, before selecting a service provider there is certain things that you have to make sure of. First, make sure the service provider you are selecting is certified and authorized by the IRS to efile 1099 misc returns. Second, the service provider should not be expensive but reasonably affordable and last, they should have a customer support system so that anytime you need assistance they are there to help you out. One such service provider who fulfills all the above requisites is tax1099.com.

Tax1099.com is an IRS certified efile provider who offers quick and efficient efiling service for your 1099 forms for price as low as $0.55 per recipient. Attax1099.com customers can enjoy the benefits of various free services and efiling of 1099 forms in an effortless manner. Tax1099.com also supports 24/7 help center for customers to provide them assistance during their filing as and when required by them. Customers can get in touch with tax1099.com via e-mail, live chat or phone.