1099 tax designations are commonly called information returns. They are collected by the IRS to track the revenues that are paid to individuals. We provide you with guidelines on how to fill them out.
Basically, this form is where you can track your revenues paid to another person for the requested tax year. For example, you would have to issue a 1099-MISC of $1,200 per year for getting the services of a lawn mower at $100 per month. This way, IRS keeps track of the revenues reported by the gardener.
Knowing the right form is essential upon filling up the 1099-MISC. Make sure you are using the MISC version as there are many types of 1099 forms. IRS won’t accept unofficial copies so don’t print the ones you see online. The forms will later be scanned through special IRS computers so you really need to get the official copy. The official copies are distributed in big libraries, major post and IRS offices. Most just go directly to the IRS office. The IRS website has a system where you can order the official cope online for delivery.
It is actually very simply to prepare the form. One tip is to print your own copy of the form so in case you make a mistake, you don’t have to throw the official copy. Moreover, you may have to provide a total for the payments you made to a person. One form is only for one person and f you are reporting for several people, get different forms for each of them.
Write your name on the top left box of the form. Including your contact detail such as name/business name, phone number, address and email is important. Write your tax identification number next in one digit per box. Then write the tax identification of the person you are issuing the form for at the box in the right side. Then, write the address of that person at the bottom of the two boxes together with his name.
The next thing you do is enter the total amount in dollars. Some are required to fill up the boxes in the middle of the form but you can leave it blank if you don’t have to. The “1 Rents” field is in the first box. If you are reporting for a paid rental, you may write it here. For a basic fee paid to someone for his services, put your annual report on box 7. This is the “nonemployee compensation” field. This is actually the mot common situation so if you are in doubt what classification is your report, you may place it in this field.
And there you have it! Once you’ve filled it out, mail the form and get another hard copy of it along with form 1096 which serves as the cover sheet of the forms you’re sending to IRS.