Form 1099 MISC – Give out or Receive?

Do you have to GIVE OUT a Form 1099 MISC?

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments or, generally, the cash paid to an individual, partnership, or estate.  Also, at least $10 in royalties, or broker payments in lieu of dividends or tax-exempt interest, any fishing boat proceeds; or Gross proceeds of $600 or more paid to an attorney.

 What does it mean if YOU RECEIVE a Form 1099 MISC                                

If you received a Form 1099 from someone or some entity who paid you over $600 in a year and you are not incorporated, then you are considered an “independent contractor” (IC).  And because you are an IC, you can 1) Deduct all expenses incurred to earn those funds, however, 2) the Net Income (money received less all expenses incurred) is subject to Self-Employment taxes of 15.3% (2013) of that income.  Thus you are required to file a Schedule C with your Form 1040 and an accompanying Schedule SE for the Self-employment tax.  Contact your tax professional for more specific details.  Or visit the IRS website at:  http://www.irs.gov/uac/Form-1099-MISC,-Miscellaneous-Income

 

 

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