Get your clients to report your freelance income using Form 1099 on time

October 29, 2007

Independent contractors are responsible for reporting all income to the IRS, whether or not you received the right forms from your clients. 1099 forms are used to report income to the IRS. This article will help prod your clients to file their 1099 forms.

Who has to report/file form 1099?

Companies/Employers who made payments of $600 or more to independent contractors who provide trade or business services.

When to report?

If the following four conditions are met, you must generally report a payment as nonemployee compensation.

Which 1099 form should you use?

Typically, you will receive or file the 1099-Misc form to report income from independent contracting / freelancing. If you have hired contractors you will need to file 1099s and if you are contractor you may receive 1099s from the companies with which you did business.

For other sources of income, though, you will need to use other 1099 forms. There are many other types of form 1099s to report income such as cancellation of debt, dividends, or income from interest.

State laws on form 1099

State laws differ on when a business is required to file a 1099. For example, some states have a limit on the amount of income an individual can be paid as 1099 income from a single business to prevent businesses from avoiding paying taxes and benefits to “employees” by paying them as independent contractors. Be sure to check with your accountant for your state’s policies.

Where to get form 1099

If you are filing your 1099s and 1096 by paper, you must file red scannable copies of the forms with the IRS. These red forms can be obtained for free from the IRS by mail (the forms may be ordered online or by calling 1-800-829-3676) or at your local IRS office. You can also buy red forms at your local office supply store.

Also note, do not use a felt tip marker, as the machine scanner cannot read that type of ink.

Important dates to remember

This is presented as general information only and should not be construed as tax advice. If you need help with filing your forms or other accounting help, please contact Heather Villa.

about the author

FreshBooks is the #1 accounting software in the cloud designed to make billing painless for small businesses and their teams. Today, over 10 million small businesses use FreshBooks to effortlessly send professional looking invoices, organize expenses and track their billable time.

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