How do I know if a worker is an employee or a contractor?<\/h2>\r\n\r\n\r\n\r\n
With the number of self-employed workers on the rise each year, the line between employees and independent contractors has become a little blurry. Let\u2019s say that you hire someone to build a website, but once the website is complete, you decide to keep that person on board to update and maintain your site. Is this person still a contractor, or are they now an employee? Generally speaking, this differentiation is not based on\u00a0how<\/em>\u00a0you pay your worker or if they work for you full-time.<\/p>\r\n\r\n\r\n\r\n The IRS uses\u00a0three guidelines<\/a>\u00a0to differentiate:<\/p>\r\n\r\n\r\n\r\n The most obvious type of payment to report is what you pay to independent workers such as writers, web designers, and other contractors\u2014including the guy you hired to cut the grass around your office. However, there are a\u00a0few other things you\u2019ll need to report<\/a>\u00a0via a 1099 such as:<\/p>\r\n\r\n\r\n\r\n You\u2019ve probably already learned that you only need to issue 1099 forms if you\u2019ve paid an independent worker or service provider more than $600 for the year. In most cases, you don\u2019t need to issue 1099s for yearly payments under $600.<\/p>\r\n\r\n\r\n\r\n No matter how you choose to send it\u2014mail, e-mail, secure website, carrier pigeon\u2014all 1099 forms need to be provided to your contractors\u00a0by January 31<\/a>. The exception to that rule is if the 31st happens to fall on a weekend, in which case you\u2019ll need to deliver it to your contractors by the next business day.<\/p>\r\n\r\n\r\n\r\n When it comes to\u00a0filing<\/em>\u00a0with the IRS, there are two deadlines. If filing by paper, submit your 1099s by March 1. Electronically filed 1099s can be submitted by March 31.<\/p>\r\n\r\n\r\n\r\n There\u2019s a lot of misinformation surrounding this question, and that is partly because the rules on this are a little murky. The official ruling is that if you use an\u00a0electronic payment service<\/a>\u00a0like PayPal or a credit card to pay a contractor or service provider, then you do\u00a0not<\/em>\u00a0need to furnish a 1099-MISC.<\/p>\r\n\r\n\r\n\r\n No matter how much you say you\u2019re sorry, the IRS will still\u00a0penalize<\/a>\u00a0you for 1099s that are filed late! This penalty is based on the February 28th deadline, and it ranges between $30 and $100 per form (up to a maximum of $500,000) depending on how late you file.<\/p>\r\n\r\n\r\n\r\n When you hire an independent worker, the IRS requires you to have that contractor complete a\u00a0W-9 form<\/a>. You\u2019ll then need to keep that form on file for at least four years. Although you don\u2019t actually need to send completed W-9s to the IRS, their purpose is to help make tax time a little bit easier. This brief form gives you everything you need to know to issue a 1099\u2014the contractor\u2019s full name and address, their taxpayer identification number, and whether or not they\u2019re incorporated.<\/p>\r\n\r\n\r\n\r\n Regardless of a person\u2019s citizenship, any contractor that you hire to perform a service here in the United States should receive a 1099 form. If, however, a non-U.S. citizen performs the service outside of the United States, then you don\u2019t need to issue a 1099.<\/p>\r\n\r\n\r\n\r\n Because the IRS uses\u00a0special paper<\/a>\u00a0to create 1099 forms, you can\u2019t simply download a PDF from their website and print as many as you like. Instead, you\u2019ll need to get your 1099 forms at one of the following places:<\/p>\r\n\r\n\r\n\r\n Who would have thought that one simple little form could incite so many questions? Use this handy blog post as a starting place to help guide you next tax season\u2014and come out looking like a pro!<\/p>\r\n\r\n\r\n\r\n\r\n
What kinds of payments need to be reported?<\/h2>\r\n\r\n\r\n\r\n
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What are the minimum payments that I need to report?<\/h2>\r\n\r\n\r\n\r\n
What are the deadlines I need to know about?<\/h2>\r\n\r\n\r\n\r\n
Do I need to file 1099s if I paid contractors electronically?<\/h2>\r\n\r\n\r\n\r\n
What if I forget and file late? Is there a penalty?<\/h2>\r\n\r\n\r\n\r\n
How are W-9 forms related to 1099s?<\/h2>\r\n\r\n\r\n\r\n
![\"1099](\"https:\/\/sonnenburgconsulting.com\/wp-content\/uploads\/2019\/01\/Worker-300x300.jpg\")
<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\nDo foreign workers get 1099s?<\/h2>\r\n\r\n\r\n\r\n
Where can I get\u00a01099 forms for my small business?<\/h2>\r\n\r\n\r\n\r\n
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Want more information or to talk to one of our professionals for free? Go to http:\/\/www.sonnenbugconsulting.com<\/a><\/h3>\r\n\r\n\r\n\r\n