Preparing 1099s is not user-friendly. The IRS does not have a direct way to input the information online. Instead, it has authorized companies to be 1099 providers. Do a search on the Internet for current providers and prices.
Annual reporting requirement
January 31 to the recipient
February 28 to the IRS
To do it yourself
Doing it yourself is possible, but not user-friendly. You have to use official IRS forms and must prepare them using a computer or typewriter (remember those?). Here is how to do it: Prepare 1 form for each payee.
What to do
Payer is your company
Recipient is the person you paid.
Payer's federal identification number is your social security number.
Recipients' identification number is their social security (if you paid an individual
or sole proprietorship), or their SS-4 number if you paid a partnership.
Remember, if you paid a corporation, you do not have complete a 1099-Misc.
Leave "Account Number" blank unless you use vendor account numbers.
Fill in the relevant boxes. Here are the most commonly used.
Rent to landlords (if you paid more than $600).
Compensation to independent contractors for services (if you paid them more than $600).
Check the box if you purchased over $5,000 of products for resale from this (non-corporate) vendor.
How to complete form 1096
1096 is the transmittal form. It must also be prepared on a computer or typewriter. Prepare one form to transmit all the 1099-Misc.
What to do
Your social security number
Enter the number of 1099s you are enclosing
0, unless you withheld income tax (line 4 on each 1099-Misc)
Add up boxes, 1,2,3,5,6,7,8, and 10 for all the 1099-Misc's Usually all but
1 and 7 are 0.
Check box 1099-MISC - 95
How to submit
Mail Copy A of 1099-M (the red page) to the IRS with transmittal Form 1096
Mail or deliver Copy B and Copy 2 to the receipient (the person or company you paid)
Keep copy C for your records
The IRS will automatically send your 1099-M information to the state tax authority.
A few more rules
$50 fine for ignoring these rules:
Type forms - regular type style
Use original forms - no copies
Submit entire 8 x 11 page - don't cut it up
Don't use dollar signs, commas or other symbols, except you should use decimal points to show dollars and cents.