The first step in filing out a 1099-MISC form is making sure you have the contractors Tax ID or SSN associated with their business. Submitting incorrect information to the IRS can result in fines and penalties. The good news is that form is free and you can download the official version here. For more information about the form read below
Businesses most commonly use IRS form W-9, Request for Taxpayer Identification Number and Certification, to get information from vendors they hire as independent contractors. When a business pays an independent contractor $600 or more over the course of a tax year, it is required to report these payments to the IRS on an information return called form 1099-MISC. Businesses use the name, address and Social Security or tax identification number from form W-9 to complete form 1099-MISC.
Businesses that hire independent contractors do not withhold income tax or pay Medicare or Social Security taxes for their independent contractors, as they do for their employees; contractors are responsible for these obligations. However, the IRS still wants to know how much these contractors are being paid to make sure contractors pay the taxes they owe, and it uses form 1099-MISC to gather this information. Businesses do not send form W-9 to the IRS.
Form W-9 asks for the independent contractor’s name; business name (if different); business entity (sole proprietorship, partnership, C corporation, S corporation, trust/estate, limited liability company or “other”; and the business’s tax identification number (or Social Security number, for sole proprietorships that don’t use a separate tax ID number). Form W-9 also asks the person filling it out to certify that he or she is exempt from backup withholding. Most taxpayers are exempt, but if they aren’t, the company hiring the independent contractor will need to withhold income tax from that contractor’s pay at a flat rate of 28% and send it to the IRS.