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
- 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
- Don’t cut the copies. Leave all the pages whole. If you only have 1 form to issue, just leave the second one blank.
- 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.
- 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
- Do not use a $ sign when typing in the amounts. It’s already on the form.
- Do use a decimal point and cents. So I didn’t pay Brad $700 I paid Brad 700.00
- Do not put 0’s in spaces, just leave them blank.
- 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.
Hi Kerri,
Sorry but I was busy filing 1099s. You can post mark it – but by the time I’m writing this it might be too late. Sorry.
Hi Delenna,
I think that U.S. would be fine. If you were using software, it’s possible that your company name would be too long.
Hi Jan,
Our nonprofit issues scholarships to students in our program if certain criteria is met. If we issue a scholarship or any other type of funds to the students which aggregates to over $600, do we need to issue them a 1099?
Thank you,
Julie
Hi,
I am hand writing some 1099-MISC forms for non-employee compensation. I used a stamp for the payer’s name (our company name) then realized the stamp abbreviates part of our name. (Example: Our name starts with United States but the stamp is abbreviated to US). Will the IRS accept that?
Thanks
Hi Jan! I just realized that the deadline to send in to the IRS was tomorrow, trying to get things settled. Do you know if postmarking it by the 31st counts? If it doesn’t and I don’t have a TCC number, is it possible to file electronically?
I got paid as a teacher in a lump sum for a weeklong camp and then paid my co-teachers, so I am not used to having to do this sort of thing!
Hi,
I need help please. I used blue ink on my 1099 forms, is it ok? Or do I have to redo them?
Thanks Cathy,
Good luck with your start up!
Hi Joey,
The contractors can get the cut forms, only the IRS requires that you keep the forms whole. You put two 1099s on the one form for the IRS.
Thank you so much for this post!! Huge help as I try to navigate running a small biz for the first time.
The IRS issued 8.5×11 carbon form appears to have 2 forms..? Can I use one 8.5×11 for 2 contractors as long as I don’t cut IRS top red copy? Or does each person need their own 8.5×11 sheet? Seems very wasteful if that’s the case…
Hi Judy,
Oh welcome to my life! In my software, there’s a settings section where I can adjust to the form. (On mine it’s about 1/10 on an inch too low.) Now, I used to work at another company and we used the IRS forms and our software didn’t fit the forms very well. Then we had a system where we gerry-rigged the form to a plain white sheet of paper and ran it through to get it right.
I think if you’re a little off – it’s not too bad, but I found that I could be really off, and I think that would pose a problem. Good luck!
Hi Kimberly,
Yes you can.
Hi Julie,
Hmmmmm. That’s a head-scratcher. If you have to print it, then print it.
We use an industry standard software and they offer a 1099 section. However, when we print the actual document it prints one space to the left of the red line. Is this going to present a problem when the IRS scans the document?
Im just needing to do just one 1099 for a contractor. Can I just type it myself on the forms I bought at office depot?
Very interesting and helpful! If the program prints the name incorrectly (tried to enter in right in the program, but it just prints it wrong for some reason) is it OK to print the correct info in the printed form that goes to the IRS? The copy to the subcontractor as well?
Thanks
Hi Linzzzz,
I’d just write on that back copy if you need to.
I’ve started hand writing my 1099s and am having trouble with it showing through to the last carbon copy. Can I write directly on the carbon copy or what should I do?
Hi Marianne,
I’m not sure what happened. I don’t see a question from you. Sorry.
Hi Renea,
You can still use the ones you bought. You might need to photocopy them though.
Hi Jane,
Sorry, but I think I’m too late for you. Technically, you are not supposed to use white out on a tax form. That said, I’ve done it before. (Because sometimes you just have to!)
Hi Marianne,
I haven’t found anything that says you can’t sign the 1096 in blue, but I found a lot of stuff that says to use black in when filling out the form. I would just use a black pen to sign it too, just to be safe.
Really! You not only didn’t answer my question, but you deleted it!
last year i used the 1099s that have the carbons and were all attached. this year i thought i bought the same ones but these have no carbons and come two to a sheet. i dont understand the difference. i have always hand written these in the past so can i still use these or should i go back and get the carbon ones? #Newatallthis
Carolyn,
What about white-out? My accounting software is checking the WRONG box on the 1096 form. I only have ONE official IRS form left and I can’t get the stupid program to correctly place the stupid x in the right box. Think I could white out the x and handwrite it in the correct box?
PS…sorry but can someone respond ASAP? I have to get these done tonight as I’m leaving tomorrow for 3 weeks and don’t want to miss the deadline.
Can I sign the 1096 with blue ink or does it have to be black ink?
Hi Carolyn,
most 1099 programs have a “forms and data” print option. I’m not sure if you’ve got that. In my program there’s a box I have to check and I can print the plain copies. If you’re using the IRS supplied forms, you could photocopy a blank one of those carbon pages and run that through the printer also. I don’t suppose that anyone receiving your 1099s would really mind if you sent them a photocopy of the IRS form. It might not be perfectly proper, but the people who need the information will get it. The bottom line is that if you are issuing a “substitute” for the official IRS form, it must contain all of the information that the IRS form would contain. If you’re photocopying the IRS form you’re clearly proving all of the IRS information to the recipient so I’m thinking that you’ll be okay.
Can I print the Copy A on the IRS-provided red ink form, but make photocopies of that for the recipient? My printer won’t make carbons (of course), so I can print the top sheet, but need to figure out how to print the other pages (carbons don’t feed well). I thought I heard something about photocopies for the recipient….
Hi Jennifer,
Personally, I’d redo them. The red forms are printed with a special ink so my guess is that if you put the numbers in the red ink – it’s going to mess up the scan. I’m sorry.
I am half way through hand writing my 1099 misc forms and realized I have been writing the dollar amount in box 7 in the red line, not underneath in the white space. I have been doing the same for the PAYERS and RECIPIENTS id numbers also.
Is that going to be a problem? I just realized there is a white space underneath the red stripes for the information.
Hi Rock,
Yup, I find it annoying too – and I’ve got a big office and access to postage machines and all the right envelopes too! I find it so annoying though that I e-file all my 1099s these days. There’s lots of online sites that will let you do it too.
It’s ridiculous for the IRS to require these to not be folded when mailed. Having to mail an 8.5″ x 11″ form unfolded obviously requires a manila envelope to transmit, which in turn incurs a more substantial postage charge (a further annoyance in my particular case requires the envelope to be dropped off at a USPS mailbox or the post office itself as I live in a condo complex with the mail boxes congregated in one area and outgoing mail fitting into a slot that barely accommodates a regular letter sized envelope).
Even if the provision could be made by which each 1099 form (they come in “twins”, perforated in between each) could be mailed individually (not joined with the other “twin”) and the 1096 Summary able to be folded, at least a smaller envelope could be used.
Hi Morgan,
There are lots of programs. I use something called Client Write up, it’s made by Drake Software. Intuit, (Quickbooks) has 1099 forms. And many of the accounting softwares do too. If you Google 1099 software you might even find a free version.
hello?
I ordered to forms to prepare the 1099. is there a template to print on the form itself? do i fill my printer with the 1099?
Hi Gina,
I’ve heard of insurance companies paying contractors that way. I think that the company that paid out the money needs to issue the 1099 to the contractor – your husband’s boss. I’m guessing that it’s his tax information that they have. But for $15,000 your husband’s boss should issue a 1099 to your husband. One way or another, you should receive a 1099 for that income. And – even if you don’t – you’ll want to be sure to report that income on your taxes because you know somebody’s going to report that they paid you.
Question. My husband did some work and got paid 15,000 for this job. The company issued a check in his bosses name and his name. His boss is actually the contractor employed and subcontracts to my husband. His boss is the inbox that pays taxes on all the income but since it was such a big amount the employer wanted to make sure that everyone got paid correctly and issued individual checks in the bosses name and other persons name. Do we need to get a 1099 for this since it was deposited in our account?
Hi Janet,
If you read all the way through the post I talk about handwritten returns.
Hello,
I just need to complete 3 1099 misc this year. Can I hand write those or do they need to be typed? I can’t seem to find the software in local stores as they’re already sold out but they have the blank forms.
Thanks for your reply. The form page definitely says “1099 Miscellaneous Form” at the top. I’d include a screen shot of the page, but it doesn’t look like I can here.
I guess I’ll put the company name in the “last name” box.
Thanks,
Jen
Hi Jen,
Hmmmm. My software has the contractor name – with the first, middle initial, and last, but there is also a spot for a business name. Don’t you have a space for that anywhere? Are you in the 1099 portion of the program, or did you get into the w2 section? (That would be a reason.)
Play around a bit, it seems to me there should be a spot for a company name. If there isn’t, I’d but the company name in the “last name” section. But my gut tells me something isn’t quite right there.
Your information is very helpful!
My question is actually very simple, but the answer is elusive: I’m using software that I bought from an office supply store, and it asks me to type in the recipient’s (payee’s) name as “first, middle initial, last.” But I need to enter the name of a company, not a person. Do I put it in the last name box?
Thank you!
Hi Julie,
You put everything you paid to the vendor on the 1099misc. It’s her job to expense those items from her tax return.
Hi Chad,
1. You may personally deliver the 1099s or have them picked up.
2. Since the advance was paid back, it seems there is no need to issue a 1099. Everything was covered through payroll.
Hi Julie,
Well you don’t have to 1099 AT&T because they’re a corporation. But if you know the company is a partnership, go ahead and 1099 them. I’m sort of in the – when in doubt, go ahead and issue the 1099 camp.
Another question for you.
One of our vendors, an independent contractor who is an event planner, in addition to her invoices, she submitted reimbursements she paid on our behalf (for things like: onsite fire marshal, balloons, hotel stay and parking, custom napkins, security services, among other things). Are we to include all of these payments on her 1099 or since they are reimbursements, do we deduct these amounts?
Thank you,
Julie Q.
Jan – Thank you so much for this valuable post. I have 2 questions:
1. Do the 1099s need to be mailed to the recipients or is it ok for them to be picked up or hand delivered?
2. I have a W-2 employee who is paid monthly through our third party payroll specialist. He needed an advance in the middle of the month this year, so I paid him with a check and he paid the advance back when his payroll came in at the end of the month. Do I need to provide him with a 1099 for the advance?
Hi Jan,
You’ve helped me in the past. Thank you!
I have a question though. I know that you are not supposed to 1099 telephone companies. Are cell phone companies and internet service providers part of that exception rule? The vendor in question is a partnership.
Thank you,
Julie
Hi Sandra,
You are receiving the income, not paying the bill – so you do not prepare a 1099. Now, if it is a business sub-letting from you, then they should issue you a 1099. But if it’s just an individual, then there is no 1099 issued at all.
I receive rent of $250.00 each month to someone subleasing space. Should I prepare a 1099 for this person?
Thank you,
Sandra
Hi Lee,
I think your idea would work. I’ve been running through a few scenarios (I work with a non-profit that had a similar problem) but I’m thinking that your solution is the best one.
I hate to think of the refund as being income to the travelers though. It seems to me that since they paid you money and you’re refunding some of it, you could possibly label it a refund instead of as income to the ticket buyer. But, clearly, I’m missing some information, such as–why didn’t they purchase their tickets through the university in the first place? There must be some reason for things being done the way they’re being done.
This seems like a hassle for you, but I’m guessing that it’s an even bigger hassle for the University and the company that will handle this will get the business.
Also, I’m thinking you’re right that this would be “other” income, not “earned income, that is if you need to issue the 1099s at all.
Bottom line, 1099 labeled as other income will work, but if you can use the excuse that it’s a refund instead of income, I like that better for everyone. (Because you wouldn’t have to issue a 1099 for a refund of purchase.)