Businesses are required by law, to send 1099-MISC forms to independent contractors (non-employees) to whom they paid $600 or more in a calendar year. These forms are due to the contractors by the end of January of the following year, and to the IRS by the end of that February.
The time period between these two due dates allows you, the independent contractor, to make sure that the 1099 is correct, in time to notify the issuer before they send their copies to the IRS. Yes, it is possible for them to send in amended returns, but why make their lives harder when you want them to contract with you again?
These are the things to check:
- Is the 1099 issued to your legal name, and is it spelled correctly?
- Is your tax id number correct? (Social Security number for most individuals)
- Is the mailing address correct?
- Is the amount correct for that calendar year? (Make sure reimbursed expenses like office supplies are not included in this total)
Since they are sending copies in to the IRS, you are required to declare this income when you file your income taxes, it’s the way the IRS makes sure you do so. If you are an individual, you file this on a Schedule C, and don’t forget to keep receipts of your legitimate expenses, so they can be deducted against this income.
For more information, see the IRS FAQ page:
1099-MISC, Independent Contractors, and Self-employed