There are several forms that circulate during the tax season, one of which being form 1099-MISC, which is intended for filing by independent contractors, provided by small business owners that utilize the services of independent contractors, pay royalties, or encounter various other costs. The form is to be supplied by the small business owner to the state tax department and the IRS before the end of February for the filing year, and supplied to those that payments are paid to before the January 15 the following year after services are rendered or costs are incurred.
Form 1099 is a tax form that is used to represent all miscellaneous income that was received during the year. Typically, this income is received through a variety of sources including:
- Contracted pay
- Fees, commissions, or rent
- Payment towards prizes, rewards, or legal services
- Golden parachute payments in excess
- Medical or health care payments received
Small business owners are most impacted by the form when more than $600 is paid to a non-employee of the business or if $10 or more is paid into royalty payments during the fiscal year. In these cases, the small business owner must complete the form 1099-Misc and proceed to provide to those that received the payments and the appropriate tax agencies and departments.