After contracting or having provided freelance services, there is need to have accurate tax reporting. It is good to understand the concept of the 1099-MISC form prior to doing that.This is a tax filing form that provides information of the payments made to an individual that the Internal Revenue Authority may regard as a non-employee of a company.Such People may be Freelancers, services providers or any independent contractor. For proof payments to services, the business owners and other individuals benefit from having the 1099-MISC form when they seek services from other people. Similarly, the form plays a significant role when keeping track and reporting the revenue of tax returns of the organization or the individual paid for their services. Therefore, the IRS uses the information given by the 1099-MISC form in making sure that income reporting is done accurately.Below are some of the things you need to take note of the 1099-MISC form.
You need to know when the form needs to be used. When services are sourced from a company that is non-employees to a company, The form should be sent to those service providers. The form should be sent at the end of the first month of the year pertaining the job done the previous year. The parties that receive the copies of the forms are the IRS and the independent contractor who provides services. These forms can only be received by people who own a business or incorporated contractors. But, for a service provider to be sent 1099-MISC form, they are required to be earning a certain amount of money. The set amount is 600 dollars and anyone that is paid less than that does not receive the form. The 1099-MISC form is not involved in purchasing any merchandise or goods. Hence, the forms are only important when there is a service being offered.
Worth noting is knowing how to file the 1099-MISC form.The Contents of the 1099-MISC include the recipient’s personal details as well as all the payments covered. Upon receiving the form from the client, the recipient should 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.