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1099M Statement for Independent Contractors Go to topics
This form is used to report business you have done with independent contractors (who are not corporations) and medical corporations. Complete Form 1099-Misc:
  • For every individual, sole proprietorship, partnership or medical corporation which you purchased $600 or more for services (not products);
  • If you purchased $5,000 or more of consumer products from a non-corporation that you intend to resell outside a permanent retail establishment;
  • If you paid a non-corporation $10 or more in royalties; or
  • If you paid a landlord $600 or more (and your landlord is not a corporation).
If you paid over $600 in interest (to a non-corporation), you must file IRS form 1099-I. To request this form, call the IRS at (800) 829-3676 or go to http://apps.irs.gov/app/picklist/list/formsPublications.html

Forms to use  1099-M Annual Information Form for Independent Contractors
1096 Transmittal Form

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.

 
How often? Annual reporting requirement
 
Due date  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.
Line  What to do
Left side
  • 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.
Right sideFill in the relevant boxes. Here are the most commonly used.

1.Rent to landlords (if you paid more than $600).
7.Compensation to independent contractors for services (if you paid them more than $600).
9.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.
Line  What to do
Top
  1. Leave blank
  2. Your social security number
  3. Enter the number of 1099s you are enclosing
  4. 0, unless you withheld income tax (line 4 on each 1099-Misc)
  5. 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.
BottomCheck box 1099-MISC - 95
 
How to submit 
  1. Mail Copy A of 1099-M (the red page) to the IRS with transmittal Form 1096
  2. Mail or deliver Copy B and Copy 2 to the receipient (the person or company you paid)
  3. Keep copy C for your records
  4. 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 staple
  • Don't use dollar signs, commas or other symbols, except you should use decimal points to show dollars and cents.
 
Questions?  For forms call (800) 829-3676. You cannot obtain original forms from the Internet. For information, call (800) 829-4933 or read Publication 937 Business Reporting.