What are the reporting requirements for businesses with respect to independent contractors?
Business owners are required to file Form 1099-MISC, Miscellaneous Income, to report payments made to independent contractors of $600 or more during the year for services that the independent contractors performed. This includes any fees, commissions, prizes or awards given to nonemployees. Form 1099-MISC must be filed with the Internal Revenue Service by February 28 of the year following the year in which the payments were made. Because of this filing requirement, it is important for a business owner to request the independent contractor’s full name or business name, address and Social Security or taxpayer identification number when hiring the contractor. The Internal Revenue Service will generally cross-reference amounts that a business owner reports as payments to an independent contractor on Form 1099-MISC with the amount of income reported in independent contractor’s tax return to ensure that they match. The contractor must report amounts earned as an independent contractor as tax
