At the end of the year, businesses are required to file total payment reports to the Internal Revenue Service (IRS).
If you are a small business or self-employed (individual), and receiving this notification, the business paying you is more than likely required to file a tax return to the IRS with your total reported payment amount.
Why am I being asked to submit my tax information?
The IRS defines specific thresholds that will dictate whether or not a Form 1099-Misc needs to be filed.
If you’ve received a request to fill in tax information for a Form-1099, the business paying you has determined it needs to report this information for end of year filings.
What is a 1099?
A 1099 is an informational form that helps a business report all non-salary income paid out within the current fiscal year.
What is a Form 1099-MISC?
The most current Form 1099-MISC looks like this.
Here’s also a quick preview:
On the form you’ll find several fields, most notably:
- Entity name
- Tax Identification Number (either a Social Security Number for an individual, or an Employer Identification Number if filing as a business)
- Categorized income
Form 1099-MISC is for business payments only
It’s important to note that total amounts reported by your customer on a Form 1099-MISC should be specifically for business payments.
For example, let’s say a business hired an independent contractor to audit their books and paid them $25,000 for the work performed. The business would then send the IRS and the independent contractor a Form 1099-MISC.
This information is based upon the provisions of the Internal Revenue Code, Treasury Regulations, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service, as of this publication date. Any such change in the law could alter or modify the statements and conclusions set forth on this website.
This information is for general information only, and is not intended to be, nor should it be construed to be, legal or tax advice to you. We urge you to consult with your own tax advisors regarding tax-specific consequences of your payments according to your own circumstances.