If there is one time of year when people around the country collectively start to worry, it would be around tax time. Let’s be honest: no one likes doing their taxes. Even those who are lucky enough to get by filling out a 1040EZ still find themselves double and triple checking to make sure they have not missed a field or miscalculated a number.
Those who routinely work with independent contractors are certainly familiar with a federal 1099 form. These forms are used to report to the IRS monies paid to workers who are not directly employed by a company. These workers – sometimes called freelancers – work for themselves or own their own businesses. Writers, maintenance personnel and technology support staff can all be examples of independent contractors. As many businesses routinely set aside work to be done by someone else, there is a good chance that your company is required to fill out a 1099 form.
When to File 1099?
There are several reasons why you might fill out a federal form 1099, but one of the most common occurs when you outsource work to a person who does not work directly for your company. Other reasons you might file 1099 might be to report the cancellation of a debt (1099-C), to report interest income (1099-INT) or to report proceeds from the sale of real estate (1099-S). There are over 20 different variations of the 1099 form, so to become more familiar with them and to learn whether or not any of them apply to your specific situation, visit the IRS website or contact an agent through their toll-free helpline.
How to File Form 1099?
The federal government requires that a federal 1099 form be filled out every time a transaction occurs. This means that every time you hire a contractor, earn interest in a savings account or sell a house, you must file 1099. As you can imagine, filling out paper forms to later be mailed can be time-consuming and even expensive. Thankfully, there is an alternative.
The Internet has changed the way we do so many everyday things, from buying products to finding doctors. When it comes to taxes, the Internet allows us the opportunity to file a variety of forms – without ever mailing a sheet of paper.
The question now is: How to file form 1099 online? The first step is visiting the IRS’ official website, which can be found at www.irs.gov. The system that will be used is called FIRE, or Filing Information Returns Electronically. In order to use FIRE, you must have an accounting program that the system supports, as the IRS does not have fillable forms online. These forms must be submitted by the end of February, with copies going to contractors (if necessary) by the end of January.
You’ve now learned why and how to file form 1099. Tax time will always be a stressful time, but now that you know that the Internet provides a great way to quickly and easily file important documents and forms, you can relax just a bit.