Yes you can. And you are supposed to!

Every year during tax time, I double check my records to make sure all the people I have paid as contractors can be sent a 1099. And as organized as I think I am, every year there is someone who I have to track down in order to get their information to do this.

This is a huge pain but good habits make this task easier. I am going to help you along with some good practices to ease the pain of this annual task.

Why do you need 1099s?

A 1099 shows the government who you paid and how much you paid them. It is you giving them notice that YOU are not going to pay taxes on that money. The contractor is going to pay taxes on that money!

It also shows that no taxes were paid on that money yet.

You can have a 1099-INT which refers to interest on an account. That is not really what we are talking about here. We are talking about 1099s that you give to people who you paid for something or some service. You are required to do this for anyone that you paid $600 or more. Examples include:

• A general contractor
• A lawyer
• A tax accountant
• A babysitter
• A photographer
• An agent (We once had a broadcast agent give us major pushback on this but we did in fact pay him for a service so I insisted on 1099ing!)

Basically anyone who does work for you that does not regularly work for you in a W-2 job must get a 1099. Remember, that if you do not 1099 someone, YOU will owe taxes on that money. If you 1099 them, the government knows that THEY owe taxes on that money.

Of course, how you are taxed is based on who pays the contractor. Which is why it is better to be paying these expenses out of your family’s small business. But again, that is beyond the scope of this post.

How do I file 1099s?

You must send the contractor a 1099 and send copies to the IRS with a summary document called a 1096. You can’t just list these payments out in your own homemade document. You must order the most current version of these documents on the IRS website.

To complete a 1099, you’ll need the contractor’s name or business name, their address, and their social security number or business tax identification number. You also need to tally the amount you paid them during a given calendar year. You then mail this to the contractor and include the information in your own tax return. You are supposed to do this by January 31st of each year but if you missed last week’s deadline, you can still get one in the mail.

How do I get all of this information from my contractors?

This is the part that you can streamline! When you are getting ready to pay a contractor, ask them for a completed W9 form! Get the most current version from the IRS website.

A W9 puts someone on notice that you intend to issue them a 1099 at the end of the year. It requests all of the information I specified above is needed on a 1099.

The trick is to ask this from your contractor BEFORE you pay him or her. If you ask for it at the end of the year when you are getting ready to 1099 them, they may not give it to you in time. Or they may ghost you altogether.

Why would they do that? They may not WANT a 1099 from you. They may not WANT to claim that income to the government. It is not on the up and up but we all know contractors do this. Really your only surefire way to get this information is to ask for it before you pay the contractor!

What about 1099s that I receive?

Good question! You will have to report the income on 1099s you receive too. Since I have several LLCs that do various types of business, I keep a filled-out W9 for each entity on hand at all times. That way when a new opportunity comes along and the company requests a W9, I have drag-and-drop at the ready! Always willing to have a new payee on my books! You hear that Universe? I’m always welcoming new opportunities to get paid!

I hope this helps answer your 1099 questions! Do let me know if you have any further!