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. Hi Bo,
    You set the tabs. I used to do this when I worked at another tax office. They were too cheap to purchase the forms to go with the software, we had to order the free IRS forms. Then we’d print out of plain paper and hold the red forms up to the light to see if we got the tabs right for everything to fit into the box. It was a pretty funny sight.
    When I went on my own, I just started buying the red forms that went with my software. Now, I don’t even do that. I e-file everything. Way easier! If you have lots of 1099s to prepare, I’d sign up for e-filing. If you don’t, you can use someone else’s site online and efile from there. It saves a big headache.

  2. Hi Erin,
    You need to write in the white spaces, especially if you’re hand writing it. Those forms are read by machine so you want to be very clear. Just get them in. Better late than never.

  3. Hi Harry,
    And I’m way late in responding you your question! Sorry, but I get too busy during filing season to respond and I forgot to shut off the comments part of the website. The penalty for late filing a 1099, if you file before August, is $100.
    But you don’t have to file a 1099 for that person. But, she might want a 1099 because she’s claiming an earned income tax credit. She’s looking for proof of income. My guess is that she went to a professional who got suspicious of her income and wanted some proof of income. But you are not required to give her a 1099.

  4. Hi Amy,
    Hmmmm. Although it could be perfectly legit, it sure does sound fishy Why didn’t they give you a proper W9 in the first place? But, maybe they made a correction. I guess it’s okay.

  5. How do you use the official red forms and still complete using a computer? The only way I to get the information onto the official red form is to hand write it. Who owns a typewriter these days….

  6. I filled out the top of the form, but wrote in the red spaces and not the white below the red. Do I need to void the top section and re-write everything in the bottom section in the correct white spaces? Also, I clearly didn’t get this filed by the 1/31 deadline for nonemployee compensation. Is there anything I need to do for late filing? Thank you!!

  7. Dear Jan Roberg,

    I’m a writer, an individual not a business. Yesterday, a web designer who worked on my website last year asked for a 1099. (I’ve never issued one before.) I only paid $500 for the work she did and told her I don’t believe I needed to give a 1099 for that amount. But she responded that she couldn’t deduct her expenses for the work without one. That didn’t make sense to me as I’ve often not received 1099s for smaller projects of my own and still consider it income and itemize my expenses. So I thought I’d look for someone who might be able to help clarify this and found your site. My first question is, am I right? Is a 1099 necessary for a $500 payment and without it can the payee still deduct expenses for her work? Second, I learned yesterday (Feb 20) as I was researching this that there is a late fee for submitting 1099s to the IRS after Jan 31. Can you tell me how much that fee is for a single 1099? I’d hate to have to pay for issuing a form I’m not required to and could use your thoughts on this. Thank you.

    Harry

  8. Hi,
    We issued a 1099 in the vendor name/EIN we made the payment to. This vendor is requesting we issue a corrected 1099 for $0 in that companies name/EIN and issue a 1099 for the original amount in a different companies name/EIN. Am I allowed to issue a 1099 to a vendor name/EIN that doesn’t even exist on our system?
    Thank you!

  10. Hi Cynthia,
    I used 999-99-9999 just so I could file the 1099. Now, if you do that, you’re going to get a letter from the IRS known as a “B statement”. It will say that the EIN is wrong. (Duh!) And that you will need to fix it before you pay that contractor again. If you do not get the correct EIN from the contractor, then you will need to begin back up withholding of 28%. That means, if you hire that contractor again, and you need to pay him $1,000 – you only can pay him $720 and you mail the other $280 to the IRS. That usually gets the contractor to give you a proper W9.

  11. Hi Brittney,
    I don’t know. If you’re using the carbonless copies, you’ll need to remember that each page needs to have the address on it. Also, the address stamp would need to be legible. So I’d think it would be okay, if you remembered to do every page and if it was legible.

  12. Hi Ashley,
    I understood what you meant. So the answer is: it depends. Some states you do, some you don’t. But first – where do your contractors perform the work? Because if they are working in Missouri, then it’s still a Missouri 1099, just like if it were a W2. But, let’s say you have IT contractors who do the work from their homes. Then the 1099 would be a 1099 for that state. Illinois doesn’t require a separate 1099 filing to the state, but other states do. You’ll just have to look up the state requirements for the one’s you’re dealing with.

  14. I am trying to do an electronic 1099 for a contractor but they never provided there so security number so the form won’t let me leave it blank what do I do

  17. Sorry I should have read that better before I sent it. *Not all of my contractors are in Missouri, is how that should have read.

  18. Not all of my contractors are not in Missouri, but do I need to send a copy of my 1099’s to the state?

  19. Hi Drew,
    I’m assuming that you’re talking about the red form that goes to the IRS. Well, there’s space to put your phone number on the 1096 transmittal form so I wouldn’t be too worried about that. If you’re sending the 1099misc to a worker, you could always send them a note with your phone number on it in case they needed to contact you. I think they’d be happier getting their 1099s on time than having the phone number in the right spot.

  20. I’m handwriting a 1099-misc. I finished and was about to stick it in the envelope when I realized I omitted my phone number, and there is no room to add it at the bottom of my address. First of all, how “required” is a phone number? If I do need to include it, how should I proceed? I am only filing one, so I have the bottom half of the page blank. Can I use that and check void on the top and corrected on the bottom? Is it acceptable to use white out? Should I order new forms and start over? (I already filed for an extension so I do have time to do this…) Thanks in advance for your help.

  21. Hi Jerry,
    Ah yes, the old trick of printing on white paper, holding it up to the light with the pink to see if it will go into the box the right way. Argggghhhh!
    I now file online! Oh my goodness, it makes my life so much easier. (Okay, full disclosure, there are other headaches that go with it.)
    But, I would probably print again if you’re in the pink. Just to be safe.

  22. Hello,
    I printed the 1099 information for all of our vendors on the IRS pre- printed forms but the amounts for non- employee compensation overlap a little into the pink shaded area of the 1099 IRS form. Will that be an issue for the scanners in reading the amounts since they are not perfectly aligned with the dollar signs?

  27. Can I hand write the 1099-Misc and the 1096?
    We are an HOA and only have one.

    BTW, thanks so much for the info!

  29. Hi Sue,
    You used to just be able to go to the library or your local IRS office. Yeah, right But all is not lost. If you can’t get them from your local IRS office, you can also buy 1099 forms are your local office supply store. Or you can hire someone to do them for you. (Ahem, Roberg Tax Solutions?) I prepare 1099s and efile the federal forms.
    But, there are also online companies too. You can Google “file 1099s online” and you get a bunch of adds. You can do it that way fairly cheaply.

  31. i am freaking out because this is my first time needing to issue 1099’s and the 1096. I did not order the forms in time thinking, hey, this is the 21st century and i can do anything online… NOT. and now I am so close to January 31st that I cannot breathe properly. What can I do??

  32. Do these rules apply to all 1099 forms? I need to do a couple of 1099-INT forms and my typewriter just gave out. I want to hand write them and the 1096 form.

  34. Hi Lisa,
    If you are reimbursing travel expenses that you were given detailed reciepts for – this is considered to be an “accountable plan” just like for employees, then you do not have to include that in the 1099. But – the recipient may not deduct those expenses on their personal return.

  35. Hi Steve,
    If you have enough forms to make a new one, I’d make a new one. These forms go through a scanner and even though you write “void” it’s possible that it could scan the incorrect information anyway. You should be okay voiding it, but why risk it if you don’t have to?

  36. If I understand correctly, I don’t include reimbursed travel expenses when paying contractors…IF they give me a detailed list/receipts. Basically, I’m just refunding their cash expense and then they (obviously) don’t include those same expenses on their return.

  37. I have made a mistake on one of my 1099 forms. Can I just write a new one below it and cross out or VOID the incorrect one?
    Thanks, your post is very helpful.
    Steve

  38. Hi Sara,
    Technically, you should issue the 1099 for the full amount and your driver should deduct the percentage he pays you as an expense on his income tax return.

  39. Hey,

    I have a trucking company and I charge my driver a percentage to find him loads. Would I make the 1099 with or without the percentage? Lets say his invoices come out to $1,100 and I charge $50 would I make the 1099 for $1,100 or $1,500.00?)

  40. Hi Nicole,
    You would think so, right? Wouldn’t that be brilliant? That’s such an incredibly great idea that of course the IRS hasn’t thought of it. There are some sites where you can do that, but you pay for it. If you google file 1099s online you get a bunch of companies that will do it for you. I don’t recommend any one over the other, but it’s not that expensive.

  41. Is there somewhere on the IRS website where I can e-file a 1099-Misc form for year 2017?

  44. Hi Fabian,
    Report the 1099MISC as income – because that’s what the IRS is going to see. Then, expense the repairs and maintenance paid to others against that income. Technically, the issuer is correct in including the reimbursement on the 1099misc since you should be writing off that expense.

    Now, if the 1099MISC is for even more than what you were paid, plus the reimbursement – then you should make an offset against the income to show that you were over-billed. I just did that today on a return. I put it on the returns and allowances line.

    So let’s say you billed $1000 for your labor. And the company also reimbursed you for $500 in parts. But they put an extra $200 on the 1099 that you never received at all – so you’ve got a 1099MISC for $1700. You have to report the $1700 in income because the IRS sees that. But you expense the $500 as supplies (line 22.) (Or, depending upon the situation, maybe it’s a cost of goods sold, then it would go on line 36 of page 2, either way – you’re writing off that reimbursement.) You’d put the extra $200 on line 2 – for returns and allowances. So now you’re only showing the $1000 that you actually earned.

    Of course, if you have any other expenses against the income, you’ll want to write that off too.

  45. Why does the IRS require us to use a typewriter to fill out their copy if we don’t want to buy third-party software?

  46. If I wrote checks to a seamstress for $1409 and $1195 was for alteration services while $214 was from sales of her items in my shop, do I put the full 1409 or 1195 on her 1099? Thanks

  47. I have received a 1099 Misc; however the amount it was reported as paid is incorrect.
    a) the largest part was for reimbursement of repairs and maintenance paid to others,
    b) there is an amount in excess of the amount of payment received
    The issuer of this 1099MISC has refused to clarify nor correct it.
    What would you suggest I do with this incorrect 1099. What recourse do I have? will the IRS help resolving the dispute?, please help me.

  50. Hi,
    If i rent a space for one day of filming, do I sent the business a 1099?
    And, is this consider Rent or other income?
    Thank you!

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