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Where e-filing information return forms comes full circle. We support 1099, 1098, W-2, and Affordable Care Act forms.

independent contractor

Filing As an Independent Contractor

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If you were hired as a freelancer or independent contractor and your total earnings were more than $600, you will need to file taxes using the renewed 1099-NEC form for the tax year 2020. What is an Independent Contractor? An independent contractor is a person or business that provides goods or services under contract or verbal agreement. Though this agreement means the independent contractor works for another company, the independent contractor is not considered an employee of that company.  Being an independent contractor gives you the freedom to set your own schedule or to supplement your day job income, but that means you are the only one responsible for tracking and reporting those freelance earnings on your taxes.  Here are some tips to help you when filing as an independent contractor. 1099-MISC vs 1099-NEC 1099 forms are the most common forms used by businesses that hire independent contractors. In the past, Box 7 on the 1099-MISC is where businesses reported their payments to contractors, but starting in the tax year 2020, the IRS has renewed the 1099-NEC (non-employee compensation) form and that is going to take the place of the 1099-MISC for freelance wage reporting. Self-Employment Taxes Self-employment taxes are taxes consisting of Social Security and Medicare taxes for individuals who work for themselves - since you don’t have an “employer”, you have to account for these taxes yourself if you are an independent contractor. You determine your self-employment tax using Schedule SE on the Form 1040 or 1040-SR. The self-employment tax rate is 15.4% and consists of two parts: 12.4% for social security and 2.9% for Medicare. For 2020, according to the IRS, the first $137,700 “of your combined wages, tips, and net earnings are subject to any combination of the Social Security part of self-employment tax, Social Security Tax, or railroad retirement (tier 1) tax.” Self-employment taxes tend to be higher than traditional employee taxes …

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Everything You Need to Know About Filing 1099 Forms

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As a business owner, bookkeeper, or accountant, you may need to file 1099 forms. What is a 1099 Form? Form 1099 is one type of IRS tax form used to report non-salary income for federal tax purposes. There are more than 20 variations of Form 1099, but the most common are 1099-MISC and 1099-NEC. Non-salary income includes: Money from tax dividends Prize winnings Gambling and lottery winnings  Interest income IRA distributions and withdrawals  Personal property sales State tax refunds Credit card debt forgiveness Who Fills Out a 1099 Form? As a business owner, bookkeeper, or accountant, you are the one who fills out 1099 forms for every non-employee you pay more than $600 in a calendar year. Who Receives a 1099 Form? Non-employees receive 1099 forms. This is usually independent contractors or freelancers, but can also be partnerships.  Every 1099 form has five copies: Copy A is meant for the IRS Copy 1 is meant for the state tax department, if applicable Copy B is for the recipient (non-employee); they do not send this form to the IRS, but they do report the income on their personal tax return Copy 2 is meant for the recipient (non-employee) to submit to their state tax department, if applicable Copy C is for your records Who Doesn’t Receive a 1099? If you pay a non-employee less than $600 in a calendar year, then you do not need to file a 1099. If a non-employee, such as an independent contractor, is registered as a C or S corporation, you do not need to file a 1099.  If you have employees, you will not file 1099s. Instead, you will file W-2s.  What Information Does a 1099 Form Require? When you go to fill out a 1099 form for each non-employee you paid at least $600 last year, you need the following information: Their legal name Their address Their taxpayer identification number (TIN) The total amount you paid them last year How Do You Get This Information? To acquire this information for each non-employee, you need to …

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Form 1099-NEC: What Does It Mean For Your Business?

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Starting in tax year 2020, Form 1099-NEC replaces former Box 7 on Form 1099-MISC. What Is Form 1099-NEC? This form solely reports Non-Employee Compensation (NEC). It replaces the use of Form 1099-MISC for reporting non-employee compensation (formerly Box 7).  The odd thing about Form 1099-NEC is that it’s not a new form at all. It was last used in 1982 but was retired. However, the IRS realized that reporting non-employee compensation on Form 1099-MISC was too complicated because the one form had multiple due dates for various boxes on the form. Learn more about why 1099-NEC returned here. What Is 1099-NEC Used For? Starting in tax season 2020, you will need to fill out Form 1099-NEC if you paid any worker $600 or more during the calendar year in non-employee compensation. This includes: You paid someone who is not your employee You paid for services in the course of your trade or employment You paid an individual, partnership, estate, or corporation Non-employee compensation includes the following payment types to independent contractors: Fees Commissions Prizes Awards Other forms of compensation for services How Do You Fill Out Form 1099-NEC? When filling out Form 1099-NEC, you will need the following information: Business’s name, address, and phone number Business’s TIN (Taxpayer Identification Number) Recipient’s name, address, and TIN Total non-employee compensation Federal and state income tax withheld Like Form 1099-MISC, there are multiple copies of Form 1099-NEC you must distribute: Copy A to the IRS Copy 1 to the State tax department, if applicable Copy B to the independent contractor Copy 2 to the independent contractor for his or her state income tax return Copy C to keep in your business records You can file Form 1099-NEC electronically or by mail.  What Else Moves From Form 1099-MISC to 1099-NEC? In addition to the typical independent contractor payments, you will now report the following on the 1099-NEC …

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E-Filing for entrepreneurs

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If you’re an entrepreneur, you might find yourself playing a guessing game when it’s time to file year-end taxes. How will you file? Which forms do you need? Where are you sending your tax information? Which regulations have changed, and what’s new this year? Do you have all your information, like TIN numbers, ready to go?  When you’re looking for convenient tax services, you want to be sure that you choose the ideal e-filing service to submit your information tax return forms on time and accurately. It’s important to choose a provider highly versed in 1099 and related tax forms, IRS deadlines, regulations, and all the important information you need to know during tax season. An e-filing service also keeps your information securely within your account, so you won’t need to input it every year.  Cost-effectiveness As a sole proprietor, you’re in charge of all the elements of your business. You decide your work hours, you pay for your own office and supplies, keep track of your deductions, and of course, you also file your taxes. You likely want to cut costs as well. Human error happens. Unfortunately, IRS regulations can mean simple human error has costly and time-consuming consequences. All important details must match up before forms are filed, like the Taxpayer Identification Number (TIN). However, TIN checking can help to ensure that recipient statements are mailed out accurately. You also likely have multiple vendors who need to be issued information return forms. With our Excel upload process, you’ll simply upload multiple forms rather than fill them out manually, which minimizes the risk of making small mistakes and helps to prevent delays.  Convenient delivery An e-filing service will mail and e-file forms where necessary, another cost and time-saving benefit. All you’ll need to do is check a couple of boxes while filling out your forms. Check out our supported forms here. You can file most 1099 forms up to January 31st at 5 PM with eFile360. …

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