Welcome to 1099 season! If the form 1099 sounds like any other tax form to you and immediately makes you feel a sense of anxiousness, let me use this blog post to clear up some of that anxiety that comes with the form 1099. Most small businesses need to consider 1099s at year-end because more often than not, business owners are hiring contractors. If this is you, here’s what you need to know about reporting payments to contractors.

What is a 1099?

A 1099 is a form showing proof of payment. There are multiple types of this form, but here are the most common:

• 1099-NEC: Non-Employee Compensation

• 1099-MISC: Rent or Royalty Payments

• 1099-B: Sales of Stock/Securities

Business owners typically need to worry about 1099-NEC and 1099-MISC for contractor and rent payments they have made throughout the year.

Who gets a 1099?

If you paid a contractor more than $600 in the tax year, you likely need to issue them a 1099. On the other hand, you should expect to recieve 1099s from businesses that you performed over $600 worth of services. However, if you paid a contractor (or were paid) by credit card, the payment processor will take care of the 1099 by issuing a 1099-K.

How and when do I file?

1099-NECs are due to be filed and sent to the recipients by January31, 2024. These forms can be prepared and on your behalf by your tax accountant. you can also prepare them yourself and file online or by paper.

Who is exempt from 1099s?

If you paid a corporation, tax-exempt organizations, or government agency more than $600, you don’t have to issue a 1099.

If 1099s are something your business has a large amount of or you just want to be confident that this is done right, let me take this task of your hands! A 1099 review is included in our bookkeeping service and we’d be happy to help! Just click the contact button below!