The “general rule” is that business owners must issue a Form 1099-NEC to each person to whom they have paid at least $600 in rents, services, prizes and awards, or other income payments. You don’t need to issue 1099s for payment made for personal purposes.
Understanding Form 1099
The IRS 1099 Form documents different types of payments made by an individual or a business that typically isn’t your employer. The payer fills out the form with the appropriate details and sends copies to you and the IRS, reporting payments made during the tax year.
Worker Classification
You cannot designate a worker, including yourself, as an employee or independent contractor solely by the issuance of Form W-2 or Form 1099-MISC. You use Form 1099-MISC to report payments to others who are not your employees.
Reporting Requirements
Since the IRS considers any 1099 payment as taxable income, you must report your 1099 payment on your tax return even if you earned less than $600 as an independent contractor.
Issuing 1099s
There are pros and cons to issuing a 1099 to yourself. Treating yourself as a W-2 employee or taking profit distributions may make more sense. Paying yourself as a 1099 independent contractor can also make sense to start earning income.
Filing and Printing 1099s
You can acquire a free fillable 1099 form from the IRS website. Once you’ve received your copy, familiarize yourself with the boxes to be completed.
Printing 1099 Forms
How do I print my 1099 forms? You can use plain white paper to print W-2 Copy A and W-3 forms. For Form 1099s, Copy A uses red ink and must be ordered from the IRS or purchased from a tax supply vendor.
Filing 1099s
To prepare and submit your 1099s, follow the steps listed below. We may send or mail a printed copy of your 1099s to your contractors when you file them with us. When are 1099s Due? By January 31 the IRS and your contractors must receive 1099s. However, before January 27 at 5:00 PM PT, we advise you to file electronically. E-filing is available until April 30.
Acquiring 1099 Forms
You can order physical, blank 1099 forms from the IRS for free, but it may take 10 business days or longer to arrive. You’ll need at a minimum, Form 1099-MISC and Form 1096. You then fill out and print both forms yourself and mail it out.
Conclusion
If you make $600 or more from a small business, freelance job or side hustle, you should receive a 1099 in the mail from the businesses or entities that paid you.