Top Tips to Prepare 1099-MISC Forms on Your Own

Posted on: 11/20/12 202 Comments
1099MISC

You can prepare your own 1099 MISC forms. All you need are the right forms.

 

The 1099-MISC form is what you need to give to a contract laborer if you pay them over $600 in the course of the year.  There’s a whole new emphasis on reporting and so many more businesses are finding that they need to be issuing 1099s.  But there’s a lot of confusion about how.

 

A few years ago I was at the IRS office near my house asking if they had any of the new 1099-MISC forms that I could have.  “What do you want them for?”  The IRS agent asked me.  So I explained to her that I was teaching a class about 1099s and wanted to have the actual forms to hand out to the class.

 

“Oh thank God!”  She said.  Now, I work with the IRS a lot.  I do audits and debt resolution, and although I genuinely like most of the agents I get to work with, I can assure you that “Oh, thank God,” is not a phrase used when the IRS is dealing with me.   (Unless it’s used as “Oh thank God she’s gone now, but that’s about it.)

 

So I asked her why she was so excited that I was teaching a 1099 class and she told me about all the mistakes that they see and the problems they have with bad 1099s. “Somebody’s got to teach this stuff,” she told me.    So I figured it would make for a good blog topic.

 

The Basics

 

Here’s a link to see the 1099-MISC form.   1099MISC       If you’re the business owner, you need to issue the 1099 to the recipient by January 31.  New for 2017 – you must submit the 1099 to the IRS by January 31 also.

 

My directions here are just an overview; here are the official IRS directions:   IRS 1099 Directions  If you have questions, that’s the best place to look.

 

The Quick and Dirty

 

Generally, when you prepare a 1099-MISC you’ll put the dollar amounts in box 7 for non-employee compensation.  If you’re preparing a 1099-MISC for any other reason, you should check the rules to make sure you’re using the right box.  I’m talking about non-employee compensation.  Write in the white part of the box, not the red.

 

Payers name, address, etc, is you.   Recipient is who you paid.  I recommend using EIN numbers instead of Social Security Numbers whenever that’s an option for safety.

 

You put the whole amount of money you paid the person into box 7.  For example, let’s say I hired Brad the Painter to do some work in my offices.  I paid him $600 for the labor, $75 for the paint, and $25 for his parking.  If I paid that money to Brad, even though part of it was for supplies not labor, I give him a 1099 for the whole $700.  Brad will write off the $75 for paint and $25 for parking as his business expenses.

 

Mail your 1099MISC with a transmittal form.  1096 Transmittal Form   

 

The filer is you (or your company.)  The forms being reported is the 1099-MISC.  The total amount reported on the 1096 is the total of what you paid the 1099 contract laborers.  Here’s a clue—that number you put in box 5 should also go somewhere on your business tax return as a 1099 contract labor expense.

 

The IRS’s Biggest Complaints

  1. People are supposed to use the red forms.  You have to use the real form; you can’t print it off the computer, even if you have a color printer.  Those forms are scanned so it has to be the right paper.  You can order your 1099-MISC and your 1096 transmittal from for free from the IRS.  Here’s the link:  IRS Forms Order
  2. Don’t cut the copies.  Leave all the pages whole.  If you only have 1 form to issue, just leave the second one blank.
  3. Don’t staple the returns.  Don’t fold, spindle or mutilate them in any way.  They have to go through a scanner so leave them plain.
  4. That means you have to mail them in the big envelope.  I keep getting asked about that.  Don’t fold means use a big envelope.

 

Smaller Complaints

  1. Do not use a $ sign when typing in the amounts.  It’s already on the form.
  2. Do use a decimal point and cents.  So I didn’t pay Brad $700 I paid Brad 700.00
  3. Do not put 0’s in spaces, just leave them blank.
  4. Do not use # signs.  For example, on the form 1096 where it asks for the number of forms, I would write 1, not #1.

 

A note about handwritten returns:  Handwritten returns are more likely to have errors than other returns.  Usually it’s a Taxpayer Identification Number and name mismatch.   If you are using a person’s name—use their social security number.  If you are using a business name, use the EIN number.  That’s a common mistake.    Be sure to use block print and not script.  Yes, I need to say, print neatly.

 

If you are typing it on a typewriter, you need to use black ink and 12 point courier font.

 

The 1099-MISC reporting rules have a lot of people confused, but you don’t have to do this alone.  We can prepare 1099-MISC for a fee and we e-file them with the IRS.

202 thoughts on “Top Tips to Prepare 1099-MISC Forms on Your Own”

  1. I’m really worry, this is my first year paying $600 for service (blog updates and stuff like that) what should I do? a 1099-MISC? I paid her using paypal since she lives in another state. Where can I find the form (read that I can’t print it at home). Do I have to fill the 1099? I’m just confused. Can you help me?

  3. Hi Sherazade,
    Calling the IRS is so fun! So is getting a root canal.

    1. So if you wind up mailing the 1099s to contractors, you normally have until January 31, but this year you have until February 2nd.

    2. Hmmm, you already paid the contractor and now they won’t give you an EIN number. So, it’s too late now, but in the future, when you’re working with someone, don’t pay them until you get the W9. Or, you can pay them, but withhold 28% of their payment–because that’s what you’re supposed to withhold from contractors who won’t issue a W9 to you. (I find it to be a very effective way to get a W9 by the way.)

    But, hindsight is 20/20. So what do you do now? You can submit the 1099 without an EIN. Yes, you’ll get and IRS notice that you’re supposed to forward to the contractor, but then at least you’ve done your reporting job.

    If you paid by credit card, or if the company is a corporation, you don’t need to issue a 1099. (I figure I’ll give you every excuse you can use.)

  5. Hi Julie Q,
    For the rent in Boston–if you pay the real estate taxes directly to the company, include it in the rent box–they will deduct it as their business expense. If you pay the tax directly to the taxing agency, don’t 1099 that at all. Definitely do not count that as non-employee compensation.

    2. If you are reimbursing your staff or students for hotel stays that they are submitting receipts to you for, you do not 1099 them. If you are paying the hotels directly, you probably shouldn’t be issuing 1099s to those either–most of them are corporations. But it sounds to me like you’ve got some hotels that are privately owned, so, this will surprise you–it’s non-employee compensation. I know, crazy right? But a hotel counts as a regular business as opposed to a landlord where you might stay for 30 days or more.

    3. Public high schools are usually non-profit corporations. So, you wouldn’t have to issue a 1099.

    4. I agree with you, if they don’t check a box, it’s better to assume you need to issue the 1099 than not to.

  6. Wow, I was not expecting this… I happened upon the Small Business section of the irs.gov website. Found a section for Stakeholder Liaison Local Contacts. Emailed my local liaison the questions and had a response within a couple of hours! 9:30 PM, on a Friday night!

    Answers –
    1) Confirmed Feb 2 is the postmark date.
    2) Was told to send the form anyway. The payor may have a penalty for not furnishing the tax id bit the IRS will try to match the person’s name with their tax id.

    Give it a try! http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Stakeholder-Liaison-Local-Contacts-1

  7. Very informative website! Thank you!

    A couple of questions… I am a bookkeeper for several small business.

    1) We intend to send forms via email through Intuit but if somehow that does not work, and/or emails bounce, when is the deadline for mailing 1099 forms to contractors? Is Feb 2 the postmark date?

    2) What if a company has paid contractors without first receiving a W9. We have made attempts to request one without a reply. Is the company subject to penalties? What should we do.

    Isn’t calling the IRS fun?!? Please save me from that Rabbit Hole 🙂

    Thank you,
    Scherazade

  8. I have another question for you. If we rent a venue for an event, do we include this on the 1099 as rent? What if the venue is a nonprofit or a corporation? I know that normally we would not issue them a 1099, but want to make sure.

    Thanks again! 🙂

  10. @Donald,
    Yes, your vendors need to have the tax ID number when they file their taxes. If they’re inputting the 1099MISC forms into a tax software, if it doesn’t have the EIN they won’t be able to efile it.

  11. Thanks, Jan!! I kinda figured it had to be on the red forms that get sent to the IRS, but I haven’t actually printed them, yet, so I’m okay, there. I’m really asking about the ones that get sent to the actual vendors. Do I need to write it on all of them?

    Thanks, again!

  13. HI Jan,

    I came across your website and it is super helpful. Thank you!

    1. I work for a 501c3 nonprofit organization in California. We have sites in several other states. For our Boston, MA site, we pay not just rent but real estate taxes as well. Can I include that as part of rent (box 1) on the 1099? Or should this amount be entered in box 7 for non-employee compensation? Or should it be deducted from the full amount paid and only include the rent in box 1?

    2. Some of our staff travels for fundraising purposes, and our students will go on college tours. I just want to make sure that I’m doing this right. I am including the amount of the hotel stay in box 1 for rent if the hotels are anything other than a corporation.

    3. If we pay a public high school district a district section fee, and pay them for transportation to take our students to a launch camp. Are these reportable on a 1099?

    4. If a company checks the LLC box but doesn’t put a C, S or a P, can I assume that it is a P and send them a 1099? I’m thinking it’s better to be safe than sorry.

    Thank you so much beforehand for your response! 🙂

    Warmly,
    Julie

  14. Hi Donald,
    Please go to my Facebook page and “like” the picture of Michael holding the red 1099 forms up to the light to see if they match up for the printer. You’ll understand the photo.
    Of course you discovered the missing EIN after all the returns were printed. Maybe we’re related?
    So, yes, you can handwrite the EINs in. It is allowed. (Don’t tell Michael I said that, but you can do that.) But, if you’ve got enough of the red forms, I’d do a reprint. But the forms cost money, so if you don’t have enough extra, it’s okay to write it in. Make sure you do it very neatly though.
    You do have to have your EIN on the forms.

  15. Dear Susan,
    So your caterer reports all his income and doesn’t need a 1099MISC? Isn’t that special?
    Well, the next time you use that caterer, you hold back 28% of his income. So if the bill is $1,000 you only pay him $720 because since you know that he really does report all of his income to the IRS you’re helping him with his self employment taxes.
    Oh–but you don’t have his TIN so when you send that money to the IRS, he won’t get credit for it.
    I’m guessing that you’ve already paid him. So it’s too late.
    So, if you paid by credit card, you don’t need to file a 1099. If the caterer is a corporation, you don’t need to file a 1099. (I’m trying to give you as many outs as possible.)

    If, the caterer really is a solo person who needs a 1099, go ahead and fill it out and leave the TIN blank. You’ll get an IRS letter which you’re supposed to forward to him., requesting the TIN.
    But mostly, I’d just not hire that caterer again.

  16. Hi Liz,
    Nope, you’re not required to provide a 1099 to your house cleaner. Now–here’s a flip side. If she needs some type of proof that she worked in order to claim EIC–I can see her wanting a 1099. But you don’t have to issue one, but you could issue her a letter or something showing how much you paid her. I can see her needing one for her taxes to prove to a preparer that she had income. But you don’t need to file a 1099.

  17. So … I just printed out all my 1099s from Quickbooks, but I realized — after they were all printed, of course — that apparently no one ever put our FEIN into our company profile and thus, it didn’t print on any of my forms. How important is that and if it must be included, can I just go back and hand write it on all the forms?

    thanks!

  18. I too am new to non-profits and 1099s. I have found answers to almost all my questions here. Thanks so much!
    Our group used a well-known catering company and party rental company for a fundraiser, paying each over $600. I called to get their TIN but they said they don’t need to receive a 1099MISC because they report all their income. They couldn’t answer the question as to whether they are incorporated.
    Does that relieve our org. from sending them? If not, how do I get their TIN since they have stated they don’t need the 1099?

  19. Hi Jan,
    Thank you for the helpful information regarding 1099’s. I was in the process of efiling a 1099 for our house cleaner when I read this statement from your December 19, 2014 post: “A homeowner is not required to prepare a 1099 and not required to send the information to the IRS.” As a homeowner, am I not required to prepare a 1099 for our house cleaner (whom we paid over $600 in 2014)?
    Thanks.

  22. Hi Jan,
    My typewriter died on me this year and I don’t have software to be able to print my 1099-Misc. If I hand write these forms, can I use carbon paper, or do I have to make each copy an original?

  23. i own a seasonal mowing business but my sons, who actually do most of the work, are paid by me. do i send them a 1099 or a W-2 form?

  24. Hi Melissa,
    1. Always use your TIN on the 1099s. Why give your social security number out to anyone?

    2. If you don’t pay until January, then put that money on next year’s 1099.

    3. If you are reimbursed for expenses, claim the income, but write off the expense.

    You’re welcome!

  25. Thanks so much for all the information you have already provided! A few questions:

    1. If I am a pass-through entity and am preparing 1099s for contractors, do I use my SSN or my TIN for my identification number?

    2. If my contractors earn money in December 2014 that I don’t pay them until January 2015, do I still include these earnings on the 2014 1099?

    3. On my side of things, when I am filing my taxes and my client has reimbursed me for expenses, do I include that as SE income and write off the same amount for the expense I incurred?

    Thanks again for all the help!

  26. Hi JC,
    Not for profit groups have a very hard time with getting professional help. Money. Fortunately, the 941 isn’t as scary as it seems. Here’s a link to the form: http://www.irs.gov/pub/irs-pdf/f941.pdf

    And here’s the instructions: http://www.irs.gov/pub/irs-pdf/i941.pdf

    And here’s the publication about payroll in general: http://www.irs.gov/pub/irs-pdf/p15.pdf

    When you’re preparing a tax form by yourself and you can’t afford professional help, my best recommendation is “read the lines.” I know that sounds kind of lame, but it’s what I do when I’m faced with a new form I don’t understand.

    Sometimes, the lines don’t make sense, but work the whole form before giving up on it. You can get weird questions that lead to the right answer.

    The 941 is almost straight-forward by IRS standards. How many employees did you have? How much did you pay them? How much did you withhold for federal income tax?

    If you go through the whole thing and still can’t do it, maybe you can find a church member who’s an accountant to help you out. Or maybe a local tax person will take a look for free or cheap.

    Granted, getting free help is hard to find during the height of tax busy season. (Had you called some place in November, you’d get plenty of offers.)

    One thing–if you’re paying payroll taxes and haven’t done so yet. You need to sign up for EFTPS. http://robergtaxsolutions.com/2010/12/irs-electronic-deposit-rule-starts-january-1st/

    Good luck.

  27. I need Help! to fill form 941 for a church which will be due soon. It is very tough right now not having enough funds to get a firm to help. Thanks. Any suggestions?

  29. Just by clicking here and there before the due date of 1099 misc I bumped into your website and every question was answered. Thank you so much!for the time you put into all this bless your heart and thanks to all these persons who asked my questions. I can breath now. 🙂

  30. Hi Sel,
    1099s cause a lot of confusion, your questions aren’t inane.

    First, New York state doesn’t require that you fill 1099MISC–that’s probably why you’re having such a hard time finding out where to file them. Here’s a chart about what states have what requirements: http://mastercfo.com/1099-misc-forms-for-states/

    Now, since you’re in New York, you will file your 1099MISC (along with the 1096) to
    Internal Revenue Service, Austin, Texas 77301. Yes, the address is that plain. People often ask me if I forgot a line or something, but no, that’s the address.

    Now, what goes where? The red page, copy A, goes to the IRS. Copy 1 would go to New York if you had to file. You keep copy C and the rest goes to the person that you paid.

    Now, the bit about the 2 forms per page. This drives me nuts. You can print two different 1099s per page. So you’re supposed to cut the pages apart before you send them to the recipients.

    BUT DON’T CUT THE PAGES YOU SEND TO THE IRS! That’s a huge no-no. See why this drives me nuts?

    So let’s say you have 5 1099s to send. you’re sending 3 pages of 1099s, 2 1099s per page with the 3rd page only having one 1099 on it. the bottom one is left blank.

    I hope this helps.

  31. Hi Jan;
    I’m new to this and i’m not sure what gets mailed to who and what I keep.
    I see there is a copy a, copy b, copy c, and copy 2. I’m based in NYC. Do I need to mail something to the state? I can’t seem to find an address. And do I fill out both forms on each copy?

    Thanks I apologize if these questions seem inane, I’m new to this.
    Cheers,
    s

  32. Hi Donna,
    1. Write in the white spaces. (That’s really a good question. Normally, I write big and would take up the whole space, but on a 1099 you want to write in the white space.)
    2. It depends. If you are issuing a 1099 to a business, put the business name on line 1 and use the EIN number. Now some people have an EIN number for their name– so in that case you would use their name on line 1, dba on line 2, and the EIN number. But if the EIN number is for the business name, use the business name on line 1. (Confused yet? Yeah, it is confusing.)
    3. If you are paying a corporation, you do not need to issue a 1099.
    You’re welcome.

  33. Hi Jan,
    Thanks for all of your good information and willingness to help. Three questions…1) When filling out 1099’s by hand – does the information go in or below the red shaded areas? 2) For recipients name, if you have an EIN number should you list the recipient’s persoanl name and then dba name beneath that? 3) If paying rent of more than $600.00 but to a corporation, do you still list the rent in box 1 or is there no need to send a 1099 because the poperty landlord is a corporation?
    Thanks so much. Donna

  34. Thank you very much, that helps me understand how to accomplish what I was thinking I needed to do.

  35. Hi Dave,
    Good question. I have to deal with that all the time. Let’s say you had revenues of $50,000. That’s the number you’re going to want in the income part of your Schedule C. You’re going to want to input the 1099MISC into your Turbo Tax program and it will carry over into the income. So you’re going to reduce the income that you’re listing in the “income” section of your Schedule C by the amount that you put into the 1099MISC section.

    So if the 1099MISC was for $2,000 then you’d put $48,000 in the income box–making the total income $50,000.

    Does that make sense? It’s important that you do list all of the 1099MISC that you receive. The IRS will use the 1099s in their document matching program so when you’re using Turbo Tax, but inputting the 1099s in the 1099 section you’re telling the IRS that you are reporting that income. It helps prevent you getting a letter.

  36. Thank you for the information you are providing. I have a small side business selling tires and repairing vehicles. I recently sold a set of tires and installed them on a local business’ shop truck. They just sent me a 1099 misc. I do my own taxes with turbo tax home and business, but my question is having an invoice that shows the transaction and then also a 1099 form, how does this not show getting paid twice for the tires I sold? I use quick books for my business transactions. Thank you for explaining this in advance.

  37. Hi Sally,
    I taught a class about preparing 1099s this past fall. Here’s a link to the slides on preparing them by hand: http://robergtaxsolutions.com/?attachment_id=4561

    Handwritten works fine for the IRS. they don’t like it, but it does work.

    If you have a software program that does 1099s, then you’ve got the format and you’re all set. If you don’t have the software, you’re better off typing or hand-writing the forms.

    Now, since you got the 1099s from the IRS, your software (if you’re using it) probably won’t match with the IRS forms. First thing you’re going to want to do is separate the red form from the rest of the pack so you can run it through the printer. Then you can print the remaining forms (the ones that go to the vendors, not the IRS) on regular paper.

    With the IRS forms, you may have to juggle the placement of their paper a little to get it to line up right. I notice that the store-bought 1099 forms that match the software have the burst section on the left while the IRS forms have the burst on the right. So if you’re printing on the red IRS forms, you may have to adjust the margins a bit.

    If you don’t mind paying, you can efile your 1099 forms through one of the online vendors for around $20 if you have 5 or less.

  38. Hey there, this has been very helpful! I am trying to do 1099’s for my independent contractors, and this is my first time having to do this. I ordered the forms from the IRS and they arrived yesterday. I have all of the information to fill them in with, but I am not sure the best way to do this! I have an inkjet printer, and could print onto the forms, but how can I get the format onto my computer so the printer knows where to put the information? I found an online form filler, but it costs money, and I’m sure there is a free way to do this….
    If not, can I just hand write the information onto the form? I read your note about handwriting, but I’m confused as to whether that is okay or not. I suppose the copy that goes to the contractor would be okay since that is just for their records, right? The copy that gets sent in to the IRS – can that also be hand written? Seems it would have to be printed….

    Thank you for the help!

  39. Hi David,
    So let me make sure that I understand–you are a regular person, not a business owner. (That really didn’t sound right but I’m guessing you know what I mean. )

    So, a person does work for a regular home owner, not a business, but he requests a 1099 for the work anyway?

    A homeowner is not required to prepare a 1099 and not required to send the information to the IRS.

    Now–here’s what might be going on. Maybe the painter needs to prove that he’s making money. I know that sounds nutty but some people have a hard time proving that they’re self employed and earning an income. Maybe he’s trying to buy a home and needs to prove income to the bank. Or, maybe he has kids and would qualify for an earned income tax credit if only he could prove that he made income.

    In a case like that, you could write a little letter saying that you paid the painter $X on such and such a date for services rendered.

    Ideally, the painter should have a receipt book and he should give you a receipt for the work that you do–maybe even have you sign that the work was completed or something like that. But–if he’s asking you for a 1099–it’s probably because he needs to prove he has income. So you shouldn’t issue one–but you could (if you wanted to) write a letter.

    I hope that helps.

  40. okay……one more question……..am i obligated to give him a 1099 if he reqeusts one? if so, do i have to report it to IRS?

  41. Hi David,
    I see the problem. If you do not own a business–then you don’t issue Brad a 1099 and you don’t write off the expense. I can only write off Brad’s cost for business expenses. For example: if he paints my home–not write off. If he paints my office–remember, I own a business–then I issue him a 1099 and I can write that expense off against my business income.

  42. Hi Jan–i’m still a little confused. Let’s just keep goign with your example about Brad. I file a regular 1040 with wages as income. HOw do i write it off as contract labor if i am NOT filing a schedule C? thanks

  44. Let’s take your example about Brad–you hired him, you paid him 700 dollars and issued a 1099. Do you get to write that off as an expense?

  45. Hi Sara,
    You received a 1099 MISC which to the IRS means that you’re self employed. If you made less than $400, no big deal, no self employment tax. But, since you got a 1099MISC, you probably made over $600.

    Fine, you’re self employed. Don’t forget to write off your business expenses like your fitness outfits. Tennis shoes. Areobic music. What have you.

    You see, you probably would just want to put that as hobby income on line 21. But because you got the 1099MISC, that makes you self employed so you are required (REQUIRED) I say to write off those business expenses. Go for it!

  46. I teach a fitness class at an Athletic Center. I received a 1099 Misc. from the Center. When I am trying to do my taxes it basically is telling me I own a business which I do not. Not sure how to fill out my taxes correctly with this. Any help would be greatly appreciated. Thanks 🙂

  47. Hi Ranulfo,
    Yes, if you provide services to a business and they pay you over $600 then they are supposed to issue you a 1099MISC. It’s the right thing to do. Since you report all of your income anyway, then it’s not problem.

  48. Hello, I am a sole proprietor of my business .I have a business name also . I do home theater and low voltage Wireing etc. I have provided services and products to a business on a few different occasions, work has totaled over $600. Of course I have invoiced them and they have paid me .They want to issue me a 1099, is this right , even though I already report all my income etc . ….please help, thanks

  50. is it okay to have some of the information in the red shaded areas? i cannot get my printer to line up perfectly — it is CLOSE — but not perfect! thank you for the advice!

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