1099 Form Filing

by ofnews on 2010/10/08

in ,Financial Services,economy

If you have received a 1099 form, you must report this income on your tax return. This income was most likely paid to you as an independent contractor, which means that the entity that paid you did not deduct taxes from your pay.

 

Many different situations qualify for an independent contractor. Most independent contractors are paid on a per job basis. Some occupations that are usually independent contractors are: artists, skilled trade, writers, advertising agents, and some marketing positions just to name a few.

 

More and more businesses are using independent contractors to help cut down their overhead costs for expenses like health insurance, life insurance, vacation and sick pay.

 

When receiving your 1099 form, your earned income will be the only amount listed; you will notice that there will not be any deductions taken for anything including federal taxes, state taxes, or social security. It is your responsibility, as the independent contractor, to pay your own tax on these earnings.

 

The most common form of 1099 is a 1099 MISC. This particular form can also have business deductions used if you have had business expenses to offset some of your tax liability. A business profit and loss form (Schedule C) must be filed with your 1099 to write-off some or all of your expenses associated with your business as an independent contractor.

There are other 1099 forms. A 1099 INT denotes the interest the government may have paid in a particular tax year. A 1099 G form would be used if you had received a tax refund from the government, not referring to an overpayment in taxes, as most tax refunds are issued.

Paying people as independent contractors and filing1099 forms benefits the employer by not having the overhead cost of an employee. For example, the employer would not have to pay payroll taxes and benefits including health insurance, vacation pay and sick pay.

When the independent contractors file their tax returns it will be their responsibility to pay any taxes assessed on their income. Some independent contractors choose to pay a quarterly estimated amount to the IRS to make sure their taxes are covered.

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