A 1099-MISC tax form is used to report earnings or payments received as a contractor, according to the Internal Revenue Service. This form is used to report the information to the IRS for income tax purposes.Continue Reading
In contrast to 1099 reporting, W-2 reporting occurs when an employee of a business earns income that is accounted for by government regulation and taxation, explains the IRS. A non-employee worker instead receives a 1099-MISC form at the end of each year to report income earned from which tax or Social Security was not withheld. A contract employee may be a fisherman, a lawyer, an independent consultant or any other person who is not officially an employee of the firm for which they are working. Many non-employees are not eligible for the benefits packages that may accompany formal employment with a firm.
As of 2015, independent consultants receive a 1099-MISC form when buying products for resale outside of a permanent retail location, if the goods purchased exceed $5,000. A person earning more than $600 as a contract employee is also be expected to report earnings to the IRS via 1099-MISC form.
A full and complete list occupations requiring 1099 reporting is not available, as any position within a company or home business could possibly be responsible for the 1099 reporting procedure. Income from a cash-paying position, such as a babysitter, may also need to be reported as income to the IRS via a 1099 tax form, explains the IRS.Learn more about Taxes