Prepare a 1099 for a Contract Worker

Instructions

Things You'll Need:
Typewriters
File Cabinets
Postage Stamps
Ballpoint Pens
Envelopes
File Folders
Office Software
Spreadsheet Softwares
1
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.
2
Obtain form 1099-MISC. It is titled "Miscellaneous Income."
3
Write your business Employer Identification Number (EIN) or your Social Security number as the payer's federal identification number.
4
Write the worker's Social Security number as the recipient's identification number.
5
Write the amount of money you paid to the independent contract worker in box 7, titled "Non-employee compensation."
6
Write any federal or state income tax withholding you have done for the worker in box 4 or 11. It is unlikely you have withheld income tax for the worker.
7
Fill in your name, address and phone number or that of your business.
8
Fill in the worker's name and address.
9
Write your state in box 12. Two-letter state abbreviations are preferred.
10
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.
11
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.
12
Send copy A to the IRS along with form 1096 by February 28. You have until March 31 to file copy A and Form 1096 if you file them electronically.
13
Retain copy C in your records.