Most organizations pay independent contractors or “freelancers” for various services, including cleaning, maintenance, odd jobs, etc. You are required to report annual payments of $600 or more to individuals on IRS Form 1099-MISC, “non – employee” compensation box 7. You need not send a 1099 form to corporations (except for incorporated law firms). The 1099-MISC forms should be provided to the independent contractors by January 31, 2017, with copies filed with the IRS by January 31, 2017.
NOTE: The due date for sending 1099-MISC forms to the IRS for 2016 payments is January 31, 2017 — an entire month earlier than previous years!
- You should review the “Independent Contractor or Employee” rules at the IRS website. IRS auditors are increasingly focused on “worker classification” issues in tax audits. If you incorrectly classify an employee as an independent contractor, you could owe substantial back taxes and harsh penalties; and
- Require every independent contractor to submit a completed W-9 form to you before you pay them the first time. In that way you are assured of collecting the necessary information for preparation of annual 1099-MISC forms.
You can download W-9 forms on our website at www.accupay.com.
Call an AccuPay “CPP/CPA services team member” at 317-885-7600 if you have further questions about 1099 filing requirements.