Sue Ann Ma has served in the financial services industry for more than 30 years. Now president of Seminal Financial Group in Houston, Texas, Sue Ann Ma routinely prepares tax returns for clients.
The 1099-MISC document reports all compensation given to a non-employee over the course of the tax year. It addresses compensation from a wide variety of service providers, including freelancers and outsource companies, and goes to any non-employee who receives $600 or more in compensation or royalties worth $10 or more within a single tax year. It also covers all direct sales of $5,000 or more to a resale buyer who is not a permanent retail business.
Because a 1099-MISC form is intended for non-employees, there is typically no tax withheld from the amount reported. It includes the total amount paid by the year, and the company must send it to the recipient no later than January 31 of the next year. The company must also send a copy of the form to the IRS, though if the January 31 date is a weekend or holiday, the payer must submit it by the next business day.
The form also includes two copies that go to the state tax department. One such copy goes to the payee, while one is for the payer to use in filing a state return. The payer keeps a third copy for its records.
