The amount of payments you receive through a year either from a single person or a entity are reported on the 1099-MISC for the year your provided them with service
The IRS requires that any company or person who makes payments to report them on a Form 1099-MISC to both the IRS and the payee. This covers a large range of payments such as rent, royalties, prizes and awards and payments that are substituted in lieu of dividends. Although the most common use of this form is to report wages and earnings when you work as a contractor.
Who prepares the 1099-MISC?
Each payer much prepare a 1099-MISC for any non-employee payee through the year. If you work as a contractor, you may receive more than one 1099-MISC. A payer must complete the 1099-MISC if it has paid you more than $600. Although if you make $500 from 10 different payers in many cases you may not receive one 1099-MISC, but you are still required to report your earnings to the IRS. A payer must provide you with a copy of the 1099-MISC by the last day of January each year and are required to have a copy to the IRS by the last day of February.
What do you do with a 1099-MISC?
If you work as an independent contractor, you must report all your earnings on your tax return just like any employee would do. But there are a few different ways you can report your 1099-MISC earnings. If you work sporadically through the year and it is generally not your main income source you can just include the payments in the other income category on the first page of your return.
If your 1099-MISC work is your main source of income throughout the year the you will be treated as self employed by the IRS and you must report your wages on a Schedule C attachment to your return.
You are also responsible to pay any Social Security and Medicare taxes, which will you calculate and file on Schedule SE.
The 1099-MISC Bonus
If you are considered self-employed and receive a 1099-MISC, you have the advantage of claiming more deductions on your taxes that are related to your profession.
