Guidelines in Preparing Information Returns
Information returns are also known as 1099 tax designations. They are collected by the IRS to track the revenues that are paid to individuals. Below is a guide on how to fill it out.
Basically, this form is where you can track your revenues paid to another person for the requested tax year. For example, you would have to issue a 1099-MISC of $1,200 per year for getting the services of a lawn mower at $100 per month. IRS uses this strategy to prove that the lawn mower reported all his earning for the year.
In filling up this tax designation, you must first know the right format. Then you have to make sure you are using the MISC version because there are many 1099 forms. IRS won’t accept unofficial copies so don’t print the ones you see online. The official version must be the one you will fill up because it is the only paper that is readable to IRS computers. The official copies are distributed in big libraries, major post and IRS offices. Ask an official copy in major post offices, IRS offices and in big libraries as well. The IRS website has a system where you can order the official cope online for delivery.
It is actually very simply to prepare the form. Make your own guide in writing by printing our your own copy and the form and filling it up. Moreover, you may have to provide a total for the payments you made to a person. Then, tally how much you have paid for someone.
The form contains a top left box when you can fill up your name. Next, fill up you business name or name followed by your contact number, your address and email. Then, write down your tax identification number in the space provided for it. Repeat the same for the right box that asks for another tax identification number but this time, write the tax identification number of the one you are issuing the form for. Then write down the name of the person and his address below the two boxes.
Then you have to enter the actual amount in dollars. Some are required to fill up the boxes in the middle of the form but you can leave it blank if you don’t have to. The box that appears first is the “1 Rents” field. Rentals paid have to be reported here. If you are reporting for a basic fee for the services rendered to you in the year requested, use box 7. This one is for the “nonemployee compensation.” Use this field if you don’t know that classification of your report as this is the mostly used field.
And there you have it! Once you’ve filled it out, mail the form and get another hard copy of it along with form 1096 which serves as the cover sheet of the forms you’re sending to IRS.