IR form is information return form, which is basically used to write about the income and tax payments from the taxpayers who are classified as independent contractors. This form is used to report the financial information to the internal revenue department of United States of America. These forms are used to report the income and to calculate the tax to be paid to the government of unites states and to collect other information required by the internal revenue code. There are a number of forms that report the income you receive throughout the year from different sources of income other than the salary you get from the employer. A 1099 form is similar to W-2 form, which reports about wages, salaries and tips, but the difference is that W-2 is filed by an employee and form 1099 is filed by a self-employed person. There are different types of form 1099, which report about different specific incomes.
The IRS requires the individual to report the alltaxable income if someone does not receive the form 1099 for that specific income. For example if someone is an individual contractor and earn less than $600 and the payee does not send the form 1099-MISC form to him then the individual contractor still has to report that income as a self-employment income. The importance of the form has led the use of the phrase "1099 workers" to refer independent contractors.
Each taxpayer must complete the 1099 form for each and every transaction. Four copies are made of the filled 1099 form one for the payer, one for the payee, one for the IRS and one for the Taxation department. A payer who files more than 250 forms then he must get them filed electronically through IRS and if the forms are less than 250 and the copies are made to the IRS, then the IRS require the form 1096 which tells about the number of forms being sent to IRS. The reports must be filed by the end of February following the year for which the income items or proceeds are paid.
The Information required for filling a 1099 Form as an independent contractor is stated below:
Personal credentials (To be mentioned in a specific space provided in form) Business tax number, this is a social security number when it is a sole proprietorship. The correct path
Credentials of the recipient such as Name, Address, City, Telephone #. Information provided on the form W-9 is used here. Tax Recipients account number.There is a square box in the form that states 2nd TIN not with a square along which needs to be checked. It has to be marked if in the case, the IRS informed or notified the individual twice in the last 3 years about incorrect tax identification number. Marking the square can help prevent further notices sent by the IRS to this recipient