If you are an employer that works with independent contractors, then you have certain tax obligations that you must fulfill as required by the IRS. This article talks about some of the things you must fulfill when organizing form 1099. First and foremost, you are required to send tax form 1099 to all independent workers that have earned $600 and above from you in a calendar year. The independent contractor must fill the tax form and send it to the IRS by January 31.
Who is an Independent contractor
Lots of people do not understand the term independent contractor and may make mistakes when trying to comply with the IRS. In a nutshell, an independent worker can be defined as temporary worker that offers services in exchange for money under certain conditions subject to the independent worker contract.
Usually, independent workers are renumerated per project and fill taxes on their own. As a consequence, engaging an independent worker professionally is quite affordable because they aren't legally your employees. Employers must be clear on the issue of independent contractors or employees because any confusion can lead to penalties by the IRS. To have an idea about form 1099, visit http://dictionary.reference.com/browse/taxation.
Due date for sending 1099 form for employers
Employers are required to send 1099 forms at www.thepaystubs.com/1099-form-generator to independent contractors early in January. Employers are then supposed to send their form by the end of February. If the deadline is missed, then the employer may be fined around $30 to 100 per form. If a company doesn't provide accurate statement to the IRS, they may incur a fine of $250 per form. The IRS has full mandate to increase the fine if they deem it necessary.
Tips for organizing Tax Form 1099
Employers must ensure that they have correct information before preparing 1099 tax form for each contractor. It''s critical to ask your independent workers if they have updated any personal info like SSN or EIN. For instance, asking contractors to send updated details including the social security numbers is critical.
The form must have the details of all the cash the independent worker has earned in a calendar year. Once you finish preparing the form send it to all the independent workers working for you. But you must make sure you remain with the copies of the forms you send out just in case the IRS needs them. The IRS is an organization that you can't joke with
Lastly, preparing the 1099 forms at www.thepaystubs.com/1099-form-generator for each and every contractor can be quite tiring. 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. The worst thing that can happen is to get in trouble with the IRS who can impose heavy penalties per form if you don't carry out the process properly.