FORM 1099: EVERYTHING YOU NEED TO KNOW

What Does a Startup Need to Know about IRS 1099 Forms?

1099s are an IRS form that you’ve got to get out to your contractors by January 31st for work that they performed the prior year.

Who gets a 1099?

Contractors, LLCs, landlords, often law firms - people or entities your company pays who are not 1) employees or 2) C-corporations. Secondly, only people who were paid $600 or more, in aggregate, the previous year.

You should be requesting W-9s from all of your non-employee vendors. Some vendors will let you know that they are C-corps and therefore do not get a 1099, so they won’t fill out a W-9.

How do you fill out a 1099?

We recommend using Track1099, a user-friendly, online software that simplifies the process of creating 1099 forms for your business. Here is now to use it to create 1099’s:

Getting Started with Track1099

To start using Track1099, you need an invite from Kruze or your accounting firm. This will allow you to set up your login. After this, we can assign your company file on the W-9 side. When you log in, you’ll see your company name. Click it to access request forms such as W-9 (for US-based contractors), W-8BEN (for international sole proprietors), and W-8BEN-E (for international entities).

Of course, you can also just go to their website and set up an account if you are not a Kruze client!!

Requesting W-9

You can request a W-9 form by simply entering the name and email address of the contractor. Alternatively, you can bulk request by downloading a W-9 CSV template, filling in the names and emails, and importing it into the system. This is recommended if you have a bunch of contractors!

After sending the request, the status will indicate “Requested”. Once the contractor submits their W-9 form, it changes to “Signed”. However, be sure to warn your contractors that Track1099 emails, while secure, can sometimes be mistaken for phishing.

Creating a 1099

To create a 1099 form, add the contractor’s details ensuring to have a valid email address. If the details are incorrect, the status will indicate “Bounced”.

If a contractor sends you a PDF form, you can manually add the form to the system. Just copy over the information exactly as it is on the form. It’s crucial to ensure it matches their tax return to avoid any complications.

Once you add the contractor’s details manually, you can delete any previous requested form.

Adding a Company

To add a company, Track1099 requires an email address and Employer Identification Number (EIN). E-filing is the primary method, but Track1099 also offers e-delivery and mailing options. However, e-delivery is preferable as it allows tracking of sent and opened forms.

Track1099 acknowledges that C Corps usually don’t need a 1099 form. You can manually select these exceptions and they will be synced to the 1099 side when needed.

Adding International Forms

The process of adding international forms is the same as domestic ones. Use the W-8BEN and W-8BEN-E forms for international contractors and make sure to have all the information on the form.

If you encounter any issues or have any questions, feel free to reach out. We’re always here to assist.

And you can visit our “how to use track1099” page to get more detailed instructions on how to fill out, create and send 1099’s.

Form 1099-MISC

Warning: This information is for informational purposes only and should not be used for official tax matters. Use the official Form 1099 and instructions, generally found at: https://www.irs.gov/forms-instructions. Rely on this information at your own risk. Visit https://www.irs.gov/forms-instructions for official IRS information. Consult with a tax professional.

Form 1099-MISC Miscellaneous Information

Form 1099-MISC Copy B

Instructions for Recipient

Recipient’s taxpayer identification number (TIN). For your protection, this form may show only the last four digits of your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN). However, the payer has reported your complete TIN to the IRS.

Account number. May show an account or other unique number the payer assigned to distinguish your account.

Amounts shown may be subject to self-employment (SE) tax. Individuals should see the Instructions for Schedule SE (Form 1040). Corporations, fiduciaries, or partnerships must report the amounts on the appropriate line of their tax returns.

Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your information correctly.

Box 1. Report rents from real estate on Schedule E (Form 1040). However, report rents on Schedule C (Form 1040) if you provided significant services to the tenant, sold real estate as a business, or rented personal property as a business. See Pub. 527.

Box 2. Report royalties from oil, gas, or mineral properties; copyrights; and patents on Schedule E (Form 1040). However, report payments for a working interest as explained in the Schedule E (Form 1040) instructions. For royalties on timber, coal, and iron ore, see Pub. 544.

Box 3. Generally, report this amount on the “Other income” line of Schedule 1 (Form 1040) and identify the payment. The amount shown may be payments received as the beneficiary of a deceased employee, prizes, awards, taxable damages, Indian gaming profits, or other taxable income. See Pub. 525. If it is trade or business income, report this amount on Schedule C or F (Form 1040).

Box 4. Shows backup withholding or withholding on Indian gaming profits. Generally, a payer must backup withhold if you did not furnish your TIN. See Form W-9 and Pub. 505 for more information. Report this amount on your income tax return as tax withheld.

Box 5. Shows the amount paid to you as a fishing boat crew member by the operator, who considers you to be self-employed. Self-employed individuals must report this amount on Schedule C (Form 1040). See Pub. 334.

Box 6. For individuals, report on Schedule C (Form 1040).

Box 7. If checked, consumer products totaling $5,000 or more were sold to you for resale, on a buy-sell, a deposit-commission, or other basis. Generally, report any income from your sale of these products on Schedule C (Form 1040).

Box 8. Shows substitute payments in lieu of dividends or tax-exempt interest received by your broker on your behalf as a result of a loan of your securities. Report on the “Other income” line of Schedule 1 (Form 1040).

Box 9. Report this amount on Schedule F (Form 1040).

Box 10. Shows gross proceeds paid to an attorney in connection with legal services. Report only the taxable part as income on your return.

Box 11. Shows the amount of cash you received for the sale of fish if you are in the trade or business of catching fish.

Box 12. May show current year deferrals as a nonemployee under a nonqualified deferred compensation (NQDC) plan that is subject to the requirements of section 409A plus any earnings on current and prior year deferrals.

Box 13. If the FATCA filing requirement box is checked, the payer is reporting on this Form 1099 to satisfy its account reporting requirement under chapter 4 of the Internal Revenue Code. You may also have a filing requirement. See the Instructions for Form 8938.

Box 14. Shows your total compensation of excess golden parachute payments subject to a 20% excise tax. See your tax return instructions for where to report.

Box 15. Shows income as a nonemployee under an NQDC plan that does not meet the requirements of section 409A. Any amount included in box 12 that is currently taxable is also included in this box. Report this amount as income on your tax return. This income is also subject to a substantial additional tax to be reported on Form 1040, 1040-SR, or 1040-NR. See the instructions for your tax return.

Boxes 16–18. Show state or local income tax withheld from the payments. Future developments. For the latest information about developments related to Form 1099-MISC and its instructions, such as legislation enacted after they were published, go to www.irs.gov/Form1099MISC.

Free File Program. Go to www.irs.gov/FreeFile to see if you qualify for no-cost online federal tax preparation, e-filing, and direct deposit or payment options.

Form 1099 Copy C For Payer

Copy C For Payer

Instructions for Payer

To complete Form 1099-MISC, use:

The current General Instructions for Certain Information Returns, and
The current Instructions for Forms 1099-MISC and 1099-NEC.

To complete corrected Forms 1099-MISC, see the current General Instructions for Certain Information Returns. To order these instructions and additional forms, go to www.irs.gov/EmployerForms.

Caution: Because paper forms are scanned during processing, you cannot file certain Forms 1096, 1097, 1098, 1099, 3921, or 5498 that you print from the IRS website.

Filing and furnishing. For filing and furnishing instructions, including due dates, and to request filing or furnishing extensions, see the current General Instructions for Certain Information Returns.

Need help? If you have questions about reporting on Form 1099-MISC, call the information reporting customer service site toll free at 866-455-7438 or 304-263-8700 (not toll free). Persons with a hearing or speech disability with access to TTY/TDD equipment can call 304-579-4827 (not toll free).