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Form 1099-Misc And Related Questions

What are the steps and paperwork to process Form 1099-Misc? Or, how is Form 1099 classified for taxation purposes? The Form 1099-MISC essentially expands to miscellaneous and is basically a form required by the IRS to record a certain type of payments made to independent contractors or non-employees. This form reports the total amount of payments or earnings received from a single person or entity to whom services were provided to during the year. Whether you are a contractor or a person issuing Form 1099, you may have several questions which can be answered by legal Experts online.

Read below a few questions answered by Experts about the Form 1099-MISC.

In California, what relevant steps and paperwork is necessary to process a Form 1099-MISC provided to independent contractors?

Generally, the Form 1099-MISC is used to report payments to independent workers. In California, if a federal Form 1099-MISC for services received from an independent contractor is used, the specific independent contractor information needs to be reported to the Employment Development Department (EDD). Additionally, if an independent contractor is hired and the following conditions are applicable, then it should be reported to EDD:

  1. A Form 1099-MISC is filed for the services performed by the independent contractor who is not considered an ‘employee.’
  2. This contractor is paid or contracted to be paid $600 or more annually.
  3. The independent contractor is an individual or sole proprietorship.

If the above statements are true, the independent contractor should be reported to EDD within 20 days of payment or contract. There is no requirement to report independent contractors who are corporations, general partnerships, limited liability partnerships and limited liability companies.

Are Form 1099-MISC sub-contractors not eligible for workers compensation in work related injuries?

Normally, independent contractors are not covered by an employer's workers compensation insurance because they are not employees. 

What conditions need to be fulfilled for a person grooming dogs to be given a Form 1099-MISC?

Typically, if the dog groomer works exclusively for a single dog owner and functions under the exclusive control of this person, he/she can be considered an employee irrespective of whether he is paid per dog or not. In the case the dog groomer works for many owners at different times and places, he/she is considered an independent contractor and can be given a Form 1099-MISC. Alternatively, if a non-employee is being paid over $600 during the year, they can be issued a Form 1099-MISC.

Should lenders be issued a Form 1099 since they have been paid interest and origination fees?

Case Details: Loans were taken to purchase, renovate and sell properties. Monthly interest payments were made to the lenders.

Based on the payment of interest on loans that are not primarily concerned with the business of lending money, the lenders cannot be issued a Form 1099. However, tax deductions/expenses/depreciation is available for the business of selling properties. 

Is it legal for a general contractor to issue a Form 1099-MISC for $30,000 which was not actually paid to a contractor (homeowner)?

Case Details: Homeowner completed minor repair work using materials purchased from the payment made by the home owners insurance.

Based on the description, this may not be legal because the person was actually paid by the insurer for the work. Most likely the general contractor is looking to avoid claiming that work because the insurance company has most likely provided the contractor with a Form 1099 as well. If there is a disagreement on this, the contractor should bring it to the insurer’s notice. To deal with this, the contractor should be informed of the anomaly and requested to send a rectified Form 1099-MISC with $0.00 on it. If this is not adhered to, IRS can be contacted to obtain a corrected Form 1099.

How to categorize Form 1099-Misc independent contractors taxation purposes?

If the compensation is reported on Form 1099-MISC form, one is considered as a self-employed individual or similar to operating one’s own business. Therefore, this income and business related expenses are reported on Schedule C which is the area within the income tax return where miscellaneous income is reported to the IRS as part of the tax return filed on Form 1040. For car owners, it is possible to deduct transportation expenses based on standard mileage rate. Commuting miles between different work locations are deductible.

Form 1099-Misc is an important document for independent contractors. Depending on the different companies worked for, an independent contractor can receive more than one Form 1099. Sometimes, dealing with the questions and doubts which arise regarding the need and issuance of this form, can be overwhelming. Moreover, both parties can have questions and this can be clarified by Experts online. To ask your particular question and get answers about Form 1099-MISC, contact Experts online, quickly and economically from the comfort of your home. 

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