Paying Independent Contractors

If you do pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business. If the following four conditions are met, you must generally report a payment as non-employee compensation.

  1. You made the payment to someone who is not your employee;
  2. You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
  3. You made the payment to an individual, partnership, estate, or in some cases, a corporation; and
  4. You made payments to the payee of at least $600 during the year.

Any required Forms 1099-MISC for the calendar year must be furnished to the independent contractor by the following January 31st and must also be filed with the IRS, transmitted with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, which is similar to a cover letter for your Forms 1099-MISC.

Please contact us if you desire assistance in determining if your business is required to file any Forms 1099-Misc or in filing the forms.