- March 4, 2018
- Posted by: ajain
- Category: Solutions
The 1099-MISC form has several purposes. This form is prepared by anyone that makes payments that are at least $600 towards rent, services performed by independent contractors, prizes or rewards, out of pocket medical payments, for payments to an attorney, and cash payments for any aquatic life purchased by anyone in the business of catching fish. In addition, you should also use the 1099-MISC form to report sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
The most common use of a 1099-MISC form is for reporting income as an independent contractor. This form also allows a lot of flexibility in claiming business related deductions. For example, if you are a freelance writer, and you need a laptop to do your work, you can claim it as a deduction. As an independent contractor, you are considered self-employed, and would need to report your 1099-MISC income on a Schedule C on your tax return. You would also be accountable for Social Security and Medicare taxes, which would be reported on Schedule SE with your return.