How Do You Know If You Need to Fill Out a 1099 Form?

Did you hire a contractor to perform services for your business? Have you prepared a 1099 information return? The IRS instructs every business individual to report the payment made to non-employees apart from regular wages on 1099 Form.

Getting confused? Don’t worry! We will let you know when a business owner needs to fill out IRS Form 1099. Furthermore, you’ll also get to know the steps to fill out the information return form. Besides, we provide information when an individual requires to fill out a 1099 MISC.

1099 form filing

What are the rules for issuing a Form 1099?

As a part of your business, if you made anyone among the following types of payments, you need to file an appropriate 1099 Form:

  • $600 or more paid for services performed by an individual who is not treated as your employee.
  • Payments are made for purchasing an aquatic life from the person who is engaged in catching fish.
  • The amount paid to a law firm for providing legal services related to your business or trade.
  • Amount of interest paid on business debt to an individual.
  • Paying dividends or distributions to the business shareholders.
  • Payments made to merchants using payment cards.

Examples of issuing 1099 Tax Form

Given below are some examples of issuing a 1099 Tax Return:

Direct Sales

When you made direct sales of at least $5,000 of consumer products to a buyer for resale in a tax period, then issue “Form 1099 MISC”.

Forgiving debt

If you released an individual form paying a debt that is secured by property, then issue “1099 A Form”. When you cancel debt from an individual, you can also issue “Form 1099 C”.

Non-employee compensation

If you paid an individual as a prize or reward for performing services related to your business, then you need to issue “Form 1099 NEC”.

Distributions from IRA

If you paid an individual as a distribution from a retirement or profit plan or an IRA, you need to issue “Federal 1099 R”.

When you’re not required to file a 1099 information return?

As per the IRS norms, you’re not required to file a 1099 information return if you meet anyone among the below circumstances:

Non-business transactions

If you’re not engaged in a trade or business and made a payment to an individual, then you’re not required to report the payment. For instance, if you purchased parts or materials for your personal use, then it is treated as a “non-business transaction”.

Business transactions

When you’re engaged in business or trade and made payments less than $600 to another business that is incorporated, then 1099 is not required. Ensure that the payments made are not for medical or legal services.

Can individuals issue a 1099 MISC Return?

Individuals may file 1099 MISC Tax Form to report the amount paid to another individual as rent, royalty, or prizes, etc. Besides, if he/she owns or operates a fishing boat and makes payments to crew members a 1099 MISC must be issued. Apart from these payments, if the individuals hire a contractor to perform services, such as yard work, and pays him $600 or more, then the payments made are considered as miscellaneous income. Report the payments on 1099 MISC.

How can I fill out a 1099 Form?

Follow the below steps to fill out a 1099 Tax Return:

  • Enter your information in the “payer section”. This includes your name, address, Taxpayer Identification Number”.
  • Provide the contractor information in the “payee section”. This includes the payee’s name, address, TIN, or SSN.
  • Fill out the account number you’ve assigned to the contractor.
  • Enter the total amount paid to the contractor throughout the tax year in the appropriate box of the form.
  • Review the form before transmitting it to the IRS.

Ready to file a 1099 information return? Searching for an IRS authorized e-file provider? Form 1099 Online is among the IRS-certified e-file providers. We provide e-filing services to file 1099 MISC, 1099 NEC, Form 1099 DIV, 1099 INT, Form 1099 K, 1099 R, and 1099 A.


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