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. This article talks about some of the things you must fulfill when organizing form 1099. First, the IRS requirement is that you must send form 1099 to all independent contractors you have paid $ 600 or more in a year. The independent contractor must fill the tax form and send it to the IRS by January 31.
Defining independent worker
Because many people are not clear about the term independent contractor, it can be quite easy to error. 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. As result, hiring independent contractors is very economical because they work for you but are not classified as your staff. It’s critical for employers not to confuse independent workers for employees because the IRS can impose hefty fines that no person would like.
Deadline for filling the 1099 form
Employers are required to send 1099 forms at www.thepaystubs.com/1099-form-generator to independent contractors early in January. End of February is the deadline that employers meet when sending form 1099. The IRS may fine employers up to $100 if the forms are filed past the set deadline. 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.
Steps for preparing form 1099
Employers must make sure that they have the accurate info when preparing 1099 for each and every independent worker. It’s a good idea to find out whether the contractor has changed or updated any personal information when filling ThePayStubs. For instance, asking contractors to send updated details including the social security numbers is critical.
Each form must include the amount of money you paid the contractor plus SSN or EIN. Once the forms are ready, you need to send the form to each and every contractor that works for you. 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. For more facts and information about IRS 1099 Tax Forms, go to http://www.britannica.com/topic/taxation.
It can be quite tiring to prepare 1099 forms for all independent contractors. Though, if you use various tools the process of preparing form 1099 can be much easier. In addition, you can simplify things further by contracting the services of an accountant. If you do everything according to book, then heavy fines may be imposed on you by the IRS.