After contracting or having provided freelance services, there is need to have accurate tax reporting.Thus, Before doing so, one needs to comprehend the available procedures of the 1099-MISC form. This 1099-MISC form entails a document with proof of payment to an individual or a service provider by a company that the Internal Revenue may term as a non-employee.Such People may be Freelancers, services providers or any independent contractor. To the three parties involved, the form is vital in that it assists business owners and people who source for services elsewhere as proof of payments to the said services. Also, when it comes to keeping track and reporting the revenue of tax returns of the company or the individual after paying for the services, the form is very important.Thus The information provided by the 1099-MISC form is used by the IRS to ensure there is accuracy in reporting of the income.Below are some of the things you need to take note of the 1099-MISC form.
It is vital to understand when to use the form. When services are sourced from a company that is non-employees to a company, The form should be sent to those service providers. This should be done by the end of the first month of every year for the work done the year before. Copies of the forms are received by two parties which are the IRS and the service provider.The Form can only be sent to individuals who own a business or registered contractors.However, there is a minimum amount a service provider should be paid for them to receive the form. The amount one needs to be earning should be 600 dollars and above otherwise those who earn less than that cannot receive the form. The 1099-MISC form is not involved in purchasing any merchandise or goods. Only at the instance of a service being offered that the form applies.
The other thing is to know how to file the 1099-MISC form. The recipient’s personal details and the payments are the information on the form. When a recipient gets the form from the client, they are supposed to file the form. For this reason, there is need to know how to file the form because it is different from other employee forms.By The requirements of the IRS, every self-employed person should report any income that amounts more than 400 dollars.
The 1099-MISC form offers a non-employee with tax advantages.One of the advantages is that they enjoy the freedom of claiming some deductions that relate to the profession which an employee cannot.