What are 1099 forms? Who files them? How do I create one?
What are 1099 forms?
The 1099 form is a document that tells the IRS how much you’ve earned, who made that payment to you and the purpose of the payment. It essentially allows the IRS to ensure the income reported by the Contractor matches up with the amount the business paid the Contractor.
Who files a 1099 form?
Businesses that paid more than $600 to independent Contractors (non-employees) and Contractors who report this income to the IRS. This includes:
- Contract payments
How do I create one?
ContractorsAs a Contractor, it’s your responsibility to report your taxable income to the IRS. If you’ve received more than $600 while working as a Contractor for someone, you’ll need to complete a 1099 form.
You can reach out to your employer to get a 1099 form. It’s important to report your income as accurately as possible because your employer will also provide a copy to the IRS. It may be helpful to send them these documents from your FreshBooks account to speed up the process.
Invoice Details Report
- Log into to your FreshBooks account
- Go to the Reports tab
- Click on Invoice Details
- Choose your Date Range, the Client (your employer) and change the Status dropdown to Paid. Click Update
- Click on the Export To button and save it as a .csv or Excel file, and email it to your employer.
- Click on the People tab
- Click on your Client (your employer)
- Under Quick Links, select Account Statement
- You can send this statement via the Send Statement button, which will allow you to Send by Email, or the Export CSV button to save it and email it yourself.
Business Owners / EmployersAs a business owner / employer, it’s your responsibility to report payments you’ve made to Contractors (over $600) to the IRS. You’ll need to provide a copy of the 1099 to both the IRS and the Contractor.
To do this, you’ll need two things – the amount you paid your Contractor and a blank template of the 1099 form to fill out.
Using FreshBooks to find the amount paid to the Contractor:
To find out how much you’ve paid your Contractor over a year, there are a few things you can do with FreshBooks:
If you’ve been receiving your Contractor’s Invoices into FreshBooks, you can convert those Invoices to Expenses and run an Expense Report.
- Follow the instructions in this article to receive your Contractor’s Invoices
- In the Invoices tab, click on the Received sub-tab. Convert the Invoices to Expenses clicking on the Expense link
- You’ll be taken to the Expenses tab to add this Expense. Add the Contractor’s name as the Vendor
- Choose Contractor as the Category
- Click on Add Expense
- Repeat until all Invoices are converted to Expenses.
Manually Adding Expenses
You can also add payments made to your Contractors manually:
- Go to the Expenses tab
- Click on the + New Expense button
- Enter the total amount of the Expense (including tax) in the Amount box. Select the relevant tax from the tax drop down if necessary
- Enter the Date of the Expense
- For Vendor, add the name of the Contractor
- For Category, choose Contractor
- Click Add Expense to save.
To Run an Expense Report:
- Go to the Reports tab
- Click on Expense Report
- Choose your date range
- Leave Group By on Category
- In the Limit To drop-down, select Contractor only as a Category
- Click Update
- Now you can export your Report as a .csv or Excel file using the Export To button
- Use the totals to fill in your 1099 form.
Blank 1099 Forms for US Businesses:
If you are in the US and using Gusto: Gusto has a 1099 form that you can fill out for your contractors.
The Gusto support page on the 1099 form can be found here.
If you are in the US and not using Gusto, you can use the IRS’ blank template:
- Go to this page
- Click on “Form 1099-MISC” which takes you to a blank PDF template.
Blank T4 Forms for Canadian Businesses:
The 1099 is called a T4 in Canada. You can use the CRA’s template here.