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What is a 1099, and When do I Need One?

what is a 1099

1099 Your Subcontractors

When hiring a subcontractor to do a job for you, you will need to issue them a 1099 for all services over $600. Some people hire a construction contractor, plumber, landscaper, and electricians. All of these professionals should be issued a 1099-Misc for services completed and paid.

Each new contractor must fill out a W9 form so you can issue the 1099 form. The W9 gives the necessary business information, including their business name, address, and federal ID number. This will then be put onto the 1099 form for tax filing purposes.

There are many different kinds of 1099’s for different purposes.

Here is a list of the most common 1099’s, they include, but are not limited to:

  • 1099-Int: Reporting Interest Income (banks, investments, stocks, etc)
  • 1099-Misc: Non-employee compensation, rent, Royalties, fishing boat proceeds, Crop Insurance, and more
  • 1099-Div: Dividend income reporting
  • 1099-R: Retirement income (distributions from your accounts)

You are not always required to issue a 1099.

Some of the instances include, but are not limited to, are as follows:

  • Your subcontractor is incorporated
  • Services rendered are less than $600 for the entire calendar year.
  • A 1099 is not issued for goods, only services
  • To your daycare provider, those are reported on a different form and they issue that to you

For your convenience we have a direct link the forms for you to print off from the IRS website. Have your independent contractor fill out and submit to your payroll department or service provider.  Also, take some time to learn what is the Form W9 and the difference between a Form W9 and Form W4 from some of our previous articles.

Download Form W-9

As one of our clients in Detroit Lakes, MN or Fargo, ND, we can help you! If you would like us to prepare your 1099 forms for the season, please submit your W9’s to us and we can prepare the forms necessary!