The Ultimate Guide to the 1099-MISC for the Freelancer

ultimate guide 1099 MISC freelancer

What is a Form 1099MISC? 

Form 1099 is an IRS tax form that reports income paid to you by someone other than your employer. There are several versions of this form, including Form 1099-MISC. It is most commonly used by businesses to show how much they paid independent contractors. 

Who receives a 1099-MISC? 

The 1099 culture has exploded in recent years. Terms like “gig economy”, “side hustle” and “1099 workers” have become synonymous with this tax form. Some examples of types of jobs that might receive this form are: 

  • Hairstylist 
  • Esthetician 
  • Nail technician 
  • Professional gamers
  • Lawn and landscaping 
  • Home daycare provider 
  • Nanny 
  • Tutor 
  • Substitute Teacher 
  • Graphic and web designers 
  • Photographers 
  • Writers 
  • Caterer 
  • Personal chef 
  • Food truck 
  • Musician, singer 
  • Dancer 
  • Event planner/wedding planner 
  • Rideshare Drivers (Uber or Lyft) 
  • Truck drivers 
  • Etsy shop owners 
  • Underwriter 
  • Transcriptionist 
  • Travel agent 
  • Accountant 
  • Real estate agent 
  • Short-term rentals (Airbnb, HomeAway, VRBO) 
  • Counselor 
  • Personal trainer 
  • Pastor 

When do 1099-MISCs arrive? 

The person or company you do contract work for is required to mail a 1099 to you no later than January 31st of the year after you worked for them. If you contracted with them in 2020, they will need to mail you the form by February 1st, 2021 because January 31st falls on the weekend. 

What happens if I don’t receive a 1099-MISC? 

If you were paid $600 or more for contract work, you should receive a 1099-MISC. However, unlike a W-2, you are not required to submit 1099s with your tax return. If you don’t receive one by February 1st, there are a few things you can do. 

Self-report your income

If you don’t receive a 1099, you can always self-report your income. That means you refer to your own records to report your total income for the year.  As a self-employed worker, it is strongly recommended that you keep accurate receipts and records of each contract job. This will help when it comes time to take specific business deductions to reduce tax liability. It’s important to keep track of your expenses as well as your income.  

Ask your employer for the form

If you want to double check your records, you can reach out to your contractor and ask them for your 1099. They may still be able to send it to you. Maybe they forgot to send it. Your note could be a helpful reminder for other people who worked for them as well. 

When do I need to file my 1099MISC? 

Generally-speaking, you need to file by April 15th. If this date falls on a weekend, your return will be due the next business day. If you can’t complete your return by this date, you still have to pay your taxes, but you can request an extension to file. If you do, your deadline will be pushed back to mid-October. 

What if I receive a W-2 and a 1099MISC? 

Working two jobs is increasingly common – especially for Millennials. If you receive both a W-2 and a 1099-MISC, TaxSlayer makes it simple and easy to file both forms on one return. Your employer will have withheld income from your paychecks for federal income tax and FICA, but you will still need to pay the self-employment tax on your 1099 income.  

What forms will I need to file after importing my 1099MISC? 

If you receive a 1099, you will most likely be required to file a Schedule C and a Schedule SE. 

Schedule C 

Despite popular belief, this schedule is not just for small business owners. If box 7 on Form 1099-MISC has an amount for non-employee compensation, you will need to report this income on this schedule. The good news is that Part 2 of this schedule allows you to take several business deductions, like vehicle expenses, advertising materials, home office expenses, meals, and travel. These can help to reduce your tax bill. 

Schedule SE

This schedule allows you to calculate what you owe for the self-employment tax. If you receive a 1099-MISC, your contract employer did not withhold your taxes for you. So, you will be required to pay the self-employment tax to cover Medicare and Social Security taxes. Use your net profit from the Schedule C to determine how much you need to pay. 

Should I pay quarterly estimated payments? 

The IRS strongly recommends that contractors expecting to receive a 1099-MISC pay quarterly estimated tax payments. This is to reduce the risk of owing too many taxes on your tax return. If you owe more than $1,000, the IRS will fine you for underpayment of taxes. But if you make tax payments throughout the year, you will avoid the fine for underpayment, and you won’t owe a large lump sum when you file your annual tax return. Use Form 1040-ES to calculate how much each of these payments should be. Then use the instructions on the form to send them in. 

The information in this article is current through tax year 2020. 

This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.

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