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. Quick question on 1099misc form. We are a travel firm that that is likely handling air travel for a university’s
    trip overseas. The university is paying us a “set” amount for everyone’s air ticket. However, some of the traveler’s
    are purchasing their own tickets. The university wants us to reimburse directly the “set” amount of the air ticket
    directly to these travelers. Can this be done by first obtaining the social security number and info of the
    traveler by W9 form and then sending them a 1099misc income form indicating as other income the set amount???

  2. Hi Valerie,
    I prefer getting totals. She’ll also need the SSNs or EINs, and of course the addresses and phone numbers as well.

  3. I really enjoyed reading your page and appreciate how knowledgeable you are! My question is this, what do I need to provide my preparer so she can prepare the 1099s I give to my subcontractors? Do I need to give her a detailed report of each of the payments I made or can I just give her a total for each sub? Thanks!

  4. Jan,
    Thank you so much for getting back to me, on a weekend especially!

    I’ll look up what it is to “request an abatement”. I’ll also look up the accountant link you sent. Thank you very much again!

  5. Hi Susan,
    Thank you for your kind words.
    First, it’s fine to hand write the 1099MISC. I don’t really think it would be an audit flag. There’s a possibility of a late fine, but if you get a letter about that, I would just request an abatement and I’m pretty sure the IRS would waive the fine (that is if they even send you a letter about it.)
    If Maryland does not require a 1099 (some states don’t) then I wouldn’t worry about it.
    I’m in St Louis, Missouri. And although I prepare returns for people all over the country, as much as I’d like your business, I personally think it’s best to work with someone in your own state. The reason being–there are things in your state I’ll just never know–like I didn’t know you didn’t need to file 1099s in Maryland.
    Also, it’s good to see somebody face to face, there’s something about the actual “sit down and talk about it together” that can never be duplicated in emails and file uploads.
    But if you’re looking to change accountants, here’s a good place to find someone near you: https://member.naea.org/naeassa/rflssareferral.query_page?p_vendor_ty=EA

  6. Jan,
    Your website is so informative! And your answers to all the comments are so helpful!
    I have a few questions of you have time.

    I am a full time engineer and registered a single owner LLC in Maryland in 2014. I have paid my contractor $3000 in 2014. He has reported the amount as his income for his tax return. I have taken that amount as expenses in my schedule C for my tax return too. However, I (actually my tax person) failed to issue the 1099misc before the deadline. I’m trying to file it now (better late than never). Since it’s only one contractor, I’m dong it myself, hand written. I want to know if this will raise a flag for audit by IRS? Should I ask my tax person to prepare it?

    Is there an option that I can file the 1099misc to IRS in 2015 tax return even though the money is filed with 2014 tax return already?

    I looked up the requirement for Maryland, they don’t require 1099misc, does that mean I don’t need to send the state copy 1 to Maryland at all?

    Also, can you tell me which state you are residing in? I want to know if I can do business with you, for my tax filing? If so, please email me, I would like to discuss with you in details.

    Thank you very much.

  7. Hi Mitch,
    Hmmmmm. This sounds like a stock transaction–and it sounds like it should be reported in 2013, not 2012. I’d talk to the IRS. Although I doubt they can settle this one over the phone, a 2103 sale date doesn’t sound like a 2012 tax return.
    And, since it’s a stock sale (it is, isn’t it?) Then you’ll want the basis of the stock to reduce that taxable income. You’ll want to file an amended return in order to report that basis.

  8. Hi Keesha,
    I have an easier idea. Have your old employer write a letter of recommendation for you. That would be written proof of employment.

  9. Hi Paula H.
    I think you’ll need to contact the IRS about obtaining a copy of the 1099s and the 1096, although I would think you could generate that in your bookkeeping software. (Unless you did it all by hand.)
    Since you’re not correcting a 1099, but filing a new one, I would just file the one 1099 with a 1096 and just report that amount But since you’ll be on the phone with the IRS anyway, I’d ask the rep for her opinion as to what to do. It seems a waste to resend all the other 1099s that are fine in the first place.

  10. Hi Sara H K,
    Technically, as a landlord, you should file a 1099MISC for any contractor that you pay over $600 to. But, if you paid by credit card, or if the contractor is a corporation, you don’t have to.

  12. I received a notice from the IRS about an “Increase in Tax” due to a 1099 I had never received for the year of 2012. On the “unreported” 1099 it has a sale date of 7/12/13. My questions are, Why a sale date in the following year? And how can I challenge this the best way with out opening a can of worms?

  13. I received a written 1099 from my ex-boss for contract work I did for him. I am now trying to apply for another job that is requiring employment verification and they are not accepting the 1099 because it is hand written. If I send him a copy of the typed information as it was mailed to me is this illegal? I am just using it for employment purposes, I have already filed my taxes and can provide the hand written one if required. Thank you!

  14. 2 things:

    The owner did not make a copy of the 1099s & 1096 when she mailed them, is there a way to get a confirmed copy?

    I missed a sub and have an additional 1099 to file, do I just attach the 1 additional 1099 to a new 1096 showing just that total or do I need to attach a copy of all the original 1099s that were sent last month with the gross numbers filled in? See above problem.

    thank you

  15. I’m a homeowner with a duplex. We rent the other unit. We deduct for maintenance, etc. usually things under $600. I’m confused by the April 2011 repeal of the law that required all to file 1099s. As a homeowner of a duplex, am I required to file or not? I had hoped to deduct an amount over $1k this year. If I am required to file a 1099, am I too late? (I had Feb. 17 as a deadline, but am now seeing Feb. 2 to notice the contractor, and March something to file with IRS.) I did tell the person doing the work that I would be reporting it on my income. Your clarification appreciated. Thanks.

  16. Thanks for the all useful information on 1099s! Due to some mis-communicating between myself and supervisor…..I found out after the deadline that I am the one to send out 1099s. Do we still send them out even though they’re late? And a lot of them we didn’t get a W-9 for, so don’t have a SSN, etc. It’s my first time doing 1099s and we just had a project with a lot of contractors this year…..I think we’ve learned how to handle this year better!! : > Thanks!

  17. Hi Jessica,
    It sounds to me like your vendor doesn’t want to report his income. If you issue him a 1099, he just has to report that he paid his landlord. No big deal. He issues a 1099 to his landlord if necessary. It’s not your problem if the guy wants to cheat on his taxes. You’re doing the right thing.

  18. Forgot to add – this vendor (the venue rental who doesn’t want to provide TIN or get a 1099) is not a corp or organized as a biz. He would be filing under his ss# if we do get to issue a 1099. Can he even claim biz expenses in that case? Is there anywhere he could offset our payment to him, so it wouldn’t appear as straight up income?

  19. Vendor is a venue we used for some parties. He says he should not get a 1099 b/c he “just paid the money right bcak to his landlord”, as in the venue rental fees were not income, but a reimbursement. But he’s not an employee of us, just a personally known venodr.
    I think this means he is supposed to get a 1099 from us, but he can report the costs he paid to landlord as business expenses. Do you agree?

  20. @Debbie,
    Congratulations on your marriage!

    Okay, something’s funky here. Are you talking about the IRS accepting your 1099s, your business return, or your personal tax return?

    The reason I’m asking is–why would your preparer use your maiden name if you went to him with your new husband and filed a joint tax return? I think he’s at least ask about your name.

    But, if you’re talking about your business return. That wouldn’t get rejected because that’s all under your EIN number. I have a client whose business is under her maiden name–she’s got her married name on all her personal stuff, but the business she never changed. So that might be your issue.

    Now if it’s your personal return that he filed using your old name, and social security has already issued you a new card in the new name–that’s weird. The IRS should have rejected that. But the systems are so slow, I’m not all that surprised. Just make sure you use your new name when you file your personal return next year.

  21. Hi Debbie,
    If you have printed forms, do not hand write the corrections. Make him fix it. Either with a “corrected” 1096/1099 or, if it hasn’t been filed yet, just have him “redo” it.

    Now your tax returns all have to be e-filed, but the e-file requirements for the 1099s are different than tax returns. E-file of 1099s is only required if you have over 250 forms. You preparer would need to have software that’s compatible with the IRS FIRE system and he’d have to go through all of the enrollment series to be accepted into the FIRE system. Depending upon how many of his clients need 1099s (and how many 1099s they need) it probably doesn’t make sense for him to do all that. It’s really not a red flag at all.

  23. Hi Angela,
    I prefer the LLC name and the DBA. Especially if your DBA is nothing like your LLC name. I’ve got one business where the contractors would have no idea who the 1099 came from if I didn’t put the DBA on there.

  24. Oh, and he also filed everything in my maiden name and it was accepted! I changed to my married name (and got a new Social Security card) as of early May 2014. Why was the return accepted? What should I do?

  25. “My tax preparer typed/printed about (12) 1099-Misc’s for our independent contractors, and there were some mistakes on them and form 1096. Can I hand write in corrections to the few Social Security numbers and names he screwed up? Also, I’m wondering why he e-filed all my taxes but wants me to mail in the 1096/1099’s, should that be a red-flag?

  27. I own a small business, and we are an LLC that operates under a dba name. When I fill out a 1099-MISC for a contractor, do I fill in both my LLC and dba name, or just my LLC name?

  28. Hi Coco,
    You’ll need to file your 990-given that your gross receipts are under $50,000 it sounds like you can file the e-postcard, but you may choose to file the 990 or 990 EZ.

    Also, you may have state filing requirements. I would check with the Alaska Secretary of State’s office to see if you need to do an annual report or anything like that. Every state is a little different.

  32. Hi Michael,
    You’re right, the IRS forms don’t work well with Quickbooks. Here’s a cheat–you can efile the forms from Quickbooks. It will cost you, but you’ll save on the red forms form the office supply store.

    You can just do those three interest forms by hand if you want–or there’s this thing called a typewriter if you’ve still got one of those.

    If you are using Quickbooks, I find you should buy the forms package that also has the black and white pages. I’ve got some clients in Quickbooks, and some I just do their 1099s “on the fly”–meaning I don’t do their bookkeeping. My software program for the on the fly clients prints the whole form, but Quickbooks doesn’t, I need to use the Quickbooks compatible forms. (Which I learned the hard way–so you can learn from my mistakes!)

  33. Hi Lydia,
    If your Landlord is a sole propiertor, then you’re supposed to issue a 1099 for the rent (box 3.) If your landlord is a corporation, then you don’t have to.

  34. Hi Sally,
    Yes, the 1099 and the 1096 go in a flat envelope. Also, since you only have one the bottom one is blank. You do not have to void the blank form at the bottom. The void is for when you’re filing multiple forms and you made a mistake on one and don’t want to rerun the entire batch, you just void the mistake and continue.

  35. Hi Donald,
    Yes I agree with that statement. How to respond to the vendors? Just tell them, “Aw, gee vendor, I know how you feel! But my accountant is all over my behind about that. She’s such a witch! She says that’s how the IRS wants it done. They say that you’re supposed to write off those reimbursements as your business expenses. If I had my way, I’d change it, but I can’t. I’m so sorry.”

    Or something like that. 🙂

  36. Dear Jan,
    Thank you for all your answers to our tax questions.

    I am a volunteer for a non profit. I am sending a 1099 to our web manager. He was paid twice, Feb 7 ’14 $575 for 2014 management. The second Oct 8th ’14 for 2014-2015 management. Total $1450. All other activities were under $600.

    The only income we have is a small raffle under $5000 and the interest ($30,000) from an endowment. My question, does this Alaska state non profit org. require any other paper work other than the 1099?

  37. I’m filling out my 1099s for this year and I realized after I hand-wrote the information that I wrote all the EINs, SSN and compensation in the red shaded areas instead of in the white areas. Today is Jan. 30 and I have to send these to the recipients by tomorrow. I don’t have any extra 1099 forms to redo them before tomorrow.
    Can I send the recipient copies as is and just redo the Copy A (the original with the red shaded areas) and send those new ones to the IRS before Feb. 28?

  38. I ordered the 1099 forms online. My husband just started the business last year. He did not get a TIN yet. I just want to make sure that he uses the business name and his SSN since we do not have a TIN yet. Am I correct?
    This site has been very helpful to us. Thank you!

  39. Thanks for the help. I have referred to this several times as I am completing a 1099 for the first time.
    You are WONDERFUL!

  40. I (finally) received my packet of 1099-INT and 1099-MISC from the IRS. Our accounting software is capable of printing 1099-MISC forms, but these forms from the IRS don’t look like they’ll survive a laser printer. Can we only get laser printable forms from an office supply store – not the IRS?

    Also, our real estate entity only has to prepare 3 1099-INTs. As long as I write neatly isn’t it just best to hand-prepare those? We do the real estate in Quickbooks and I don’t see where to prepare 1099-INTs.

    Thanks!

  41. Hi, again, Jan … I’m back … 😉

    well … my 1099s went out and have obviously been received, as I’ve already had a couple calls regarding travel reimbursement payments that are included, since I can’t, for the life of me, figure out how to exclude them, in QuickBooks. I had read a response from another Tax Professional that said “you should report all money paid to a nonemployee (income and expense reimbursements) in excess of $600 in Box 7 (Nonemployee Compensation) of the 1099-Misc. You do not need to distinguish between income and expense reimbursements on the 1099-Misc.” I guess my question is, do you agree with this answer and if so, how do I relay this to a vendor who is asking for a corrected 1099 that I really don’t know how to generate, or feel like I should have to generate. 🙂

    Thanks, again for your help!!

  42. Thank you so much for providing this information! Very helpful to us small business owners who have no clue what we are doing. I just read somewhere that I need to issue a 1099 to individuals who I paid more than $600 in rent last year. Does that mean I need to give my landlord a 1099? I thought I had it all figured out!

  43. Do 1096 & accompanying 1099 misc forms need to be mailed flat in a 9 x 12 envelope? Also we only have one 1099 misc to file, so we have left the second form blank. Do we also need to check the void box? Thank you.

  44. but will have to issue a 1099-K? or nothing at all? or what evidence she has that I paid her? or do I have to do anything else? sorry for all this questions, thanks a lot for your reply!

  49. I’m so sorry for my never-ending questions. So, if one of our landlords is a nonprofit, we should not issue a 1099, is this correct?

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