Tax season is here and the deadline to file your return or extension is April 15. That’s coming up fast! Before you file your return, you’ll receive a few different forms for your business. These forms, whether you’re an independent contractor or a business owner, aren’t your typical W-2. If you employ contractors, the 1099-MISC must be postmarked by January 31.
When you get down to it, two forms in particular matter most to self-employed professionals and business owners: the 1099-K and the 1099-MISC.
A 1099-K is also referred to as a “Payment Card and Third Party Transactions” form. This form is used by card brands like American Express and Visa and third-party processors. This form is specifically for merchants who:
- Received payment from credit cards and debit cards
- Had gross payments of $20,000 or more, and
- Had over 200 transactions
To put it simply, you’ll receive this form if you accepted credit or debit cards at your business. Some payment processors charge a fee for reporting your information to the IRS. You’ll receive this form no later than January 31. Sending Copy A of your 1099-K to the IRS by mail is due February 28. Filing Copy A electronically through the IRS’ FIRE system is due March 31.
A 1099-MISC form is distributed to self-employed professionals, contractors, or freelancers. If you employed a contractor or freelancer $600 or more during the year, you’ll need to get a 1099-MISC from your payroll service provider or directly from the IRS. The 1099-MISC can’t actually be downloaded from the Internet due to the special ink used on the form. You’ll need to fill out a form for each non-employee you paid.
To fill out a 1099-MISC form, you’ll need the contractor’s taxpayer ID number, their address, and the total amount that you paid them in the past year. You can submit these forms online or in the mail. If you submit through the mail, you’ll need to fill out another form – the 1096. This is basically a summary report of all of your 1099s. If you fill out more than 250 1099-MISC forms, you’re required to submit them electronically.
You’ll need to mail these forms no later than January 31. You’ll need one or both of these forms depending on the type of work you do or business you own. But what’s most important is keeping these documents in a safe place until you send them out. Submitting these forms late can incur serious penalties and fines.