What Form Do 1099 Contractors Fill Out?

Independent contractors manage their own tax obligations, unlike traditional employees who have taxes withheld. This requires contractors to use various tax forms to comply with federal regulations. A key form contractors complete for entities that pay them is Form W-9.

Providing Your Taxpayer Information

Independent contractors typically fill out Form W-9, Request for Taxpayer Identification Number and Certification, for entities that pay them for services. This form provides the payer with accurate identifying information, including your name, address, and Taxpayer Identification Number (TIN), which allows the payer to correctly report payments to the Internal Revenue Service (IRS). This form is essential for independent contractors, freelancers, and sole proprietors who receive payments for services.

Form W-9 requires specific details to ensure proper tax reporting. You must enter your legal name exactly as it appears on your income tax return on Line 1. If you operate a business with a different name, such as a sole proprietorship or single-member LLC, you would include that business name on Line 2. On Line 3, you indicate your federal tax classification by checking the appropriate box, such as individual/sole proprietor, C Corporation, S Corporation, Partnership, or Limited Liability Company (LLC).

Your current address, including street, city, state, and ZIP code, should be entered on Lines 5 and 6. This address should match the one you use on your tax return. The most important piece of information on the W-9 is your Taxpayer Identification Number (TIN), which is entered in Part I. For individuals and sole proprietors, this is generally your Social Security Number (SSN). If you have an Employer Identification Number (EIN) for your business, you would use that instead. Finally, by signing Part II, you certify that the information provided is correct and that you are not subject to backup withholding.

Submitting the Taxpayer Information Form

Once you have completed Form W-9, you must submit it to the entity that requested it. The submission process typically involves either electronic or physical methods. Many businesses utilize online portals, secure email, or e-signature services for electronic submission, streamlining the process. Alternatively, you might submit the form physically by mailing it or handing it in person.

It is advisable to confirm the preferred submission method with the payer to ensure they receive the form promptly and securely. After you submit the W-9, the payer retains it for their records. The information on this form enables them to fulfill their obligation of preparing and issuing an information return, such as Form 1099-NEC, to both you and the IRS at the end of the tax year.

Forms You Receive

As a 1099 contractor, you will receive certain forms from the entities that pay you, which are distinct from the forms you complete for them. The primary form you will receive is Form 1099-NEC, Nonemployee Compensation. This form serves as an information return prepared by the payer to report payments made to nonemployees, including independent contractors, to both the IRS and you. Payers are generally required to issue Form 1099-NEC if they paid you $600 or more for services during the calendar year.

This form is typically issued by January 31st of the year following the payment year. Form 1099-NEC includes important details such as the payer’s name, address, and Taxpayer Identification Number, along with your name, address, and TIN. It also clearly states the total nonemployee compensation paid to you in Box 1. While this form is crucial for your tax reporting, it is important to remember that it is a document you receive from a client, not one you fill out for them. The IRS also receives a copy of this form.

Reporting Your Business Income

Independent contractors are responsible for reporting their business income and expenses on their personal tax returns. For sole proprietors and single-member LLCs, this typically involves using Schedule C (Form 1040), Profit or Loss from Business. Schedule C is where you detail your gross receipts or sales and itemize various business expenses, such as advertising, supplies, and vehicle use, to calculate your net profit or loss from your business. The net profit or loss from Schedule C is then reported on your personal income tax return, Form 1040.

In addition to reporting income and expenses, independent contractors must also calculate and pay self-employment taxes. This is done using Schedule SE (Form 1040), Self-Employment Tax. Self-employment tax covers your Social Security and Medicare contributions, which are typically split between employees and employers in a traditional employment setting. As a self-employed individual, you are responsible for both portions, which totals 15.3% of your net earnings from self-employment up to certain income thresholds. You are generally required to file Schedule SE if your net earnings from self-employment are $400 or more. Both Schedule C and Schedule SE are filed as part of your individual income tax return and are not forms you provide to your clients or payers.