If you are an employer that employs the services of independent contractors, then the Internal Revenue Service requires you to meet a number of tax responsibilities. The following article mentions a few things you should follow when preparing tax form 1099. Firstly, you must send tax form 1099 to an independent contractor you’ve paid $600 or more in year. An independent worker ought to fill and send the form back to IRS in time as required by law.
Who is an Independent contractor
Plenty of individuals may commit errors because they are not sure what the phrase independent worker means. In short, independent contractors can be explained as part time workers who offer services under the independent contractor agreement conditions.
Independent contractors have an obligation to fill their own taxes and are paid based on specific work they complete. Because of this factor, it is quite cheap to hire independent contractors since they are not technically your employees. Employers must be clear on the issue of independent contractors or employees because any confusion can lead to penalties by the IRS.
Due date for sending 1099 form for employers
Independent contractors are supposed to receive tax form 1099 by January. End of February is the deadline that employers meet when sending form 1099. If the deadline is missed, then the employer may be fined around $30 to 100 per form. Employers who submit wrong info to the IRS can pay a heavy penalty of $250 or more to the Internal Revenue Services. The IRS has full mandate to increase the fine if they deem it necessary.
Tips for organizing Tax Form 1099
For each and every worker, employers ought to make sure that they get the correct data. It’s a good idea to find out whether the contractor has changed or updated any personal information when filling form 1099. For example, requesting contractors to send their updated personal info.
The form must have the details of all the cash the independent worker has earned in a calendar year. After organizing your form, send it to all your independent contractors. But ensure that you keep a copy of the documents you send just to be safe because the IRS may need them. The IRS is body that you should not mess with.
It can be quite tiring to prepare 1099 forms for all independent contractors. But you can make the process a bit easier by using various tools in the market. In addition, you can simplify things further by contracting the services of an accountant. The last thing you want is to get in trouble with the IRS who can fine you lots of money per form.