Being self-employed/independent contractor can make life easy and more complicated at the same time. Easy because you are your own boss, can make your own schedule, etc… More complicated because now you have the 1099’s, estimated taxes, bookkeeping, etc. And what if you actually HIRE an independent contractor…. the horror!
Here’s the quick and dirty on who should get a 1099… straight from the horse’s mouth. Well, not literally a horse – I mean the IRS.
File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:
- At least $10 in royalties (see Box 2 on page 4) or broker payments in lieu of dividends or tax-exempt interest (see Box 8 on page 7);
- At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
- Any fishing boat proceeds; or
- Gross proceeds of $600 or more paid to an attorney. See Payments to attorneys on page 2.
If any of these situations apply… the person should receive a 1099. If you have additional questions, please seek the assistance of a professional tax advisor.
Instructions for Form 1099-MISC