It’s that time of year again, y’all. The end of the year is just around the corner, and you know what that means: tax season is almost upon us. And let’s be real, ain’t nobody excited about dealing with taxes. But one thing you gotta make sure you’re on top of is your 1099s.
What the heck is a 1099?
If you’re an independent contractor or freelancer, you’re probably all too familiar with the 1099 form. It’s the document that reports your income to the IRS so they can tax you properly. But did you know there’s a new 1099 form this year?
What’s different about the new 1099 form?
This year, there’s a new form called the 1099-NEC. It stands for “nonemployee compensation,” and it’s specifically for reporting payments to independent contractors and freelancers. So if you’re an independent contractor or freelancer, you’ll receive a 1099-NEC for any payments you received over $600 from a single client or company.
Why the change?
The IRS decided to bring back the 1099-NEC because they found that some people were confusing the 1099-MISC form with nonemployee compensation. The 1099-MISC form is still around, but it’s now specifically for reporting other types of income, like rent and royalties.
When do you need to file your 1099s?
If you’re the person or company paying an independent contractor or freelancer, you need to send out their 1099 forms by January 31st.
If you’re the independent contractor or freelancer, you should receive your 1099 forms by January 31st as well. You don’t need to file your taxes with the IRS until April 15th, but it’s a good idea to start gathering all your tax documents early so you’re not scrambling at the last minute.
What happens if I don’t file my 1099s?
Not filing your 1099s can result in some serious consequences. If you’re the person or company paying an independent contractor or freelancer and you don’t file their 1099 forms, you could face penalties from the IRS. And if you’re the independent contractor or freelancer and you don’t report your income, you could face penalties and interest charges.
How do I file my 1099s?
Filing your 1099s is relatively straightforward, but it can be time-consuming if you have a lot of them to file. You’ll need to use either Form 1099-MISC or Form 1099-NEC to report your payments to independent contractors or freelancers. You can file these forms electronically or by mail.
Final thoughts
Dealing with taxes can be a real pain in the butt, but it’s important to make sure you’re following all the rules and regulations. That means making sure you’re on top of your 1099s. So remember, if you’re an independent contractor or freelancer, make sure you’re keeping track of all the payments you receive from clients or companies. And if you’re the person or company paying an independent contractor or freelancer, make sure you’re sending out their 1099 form by January 31st. It’s better to be safe than sorry!
