If you have employees or independent contractors, you only have a few days left to prepare and issue W-2s and 1099s for them.  January 31 is the official due date, but since it falls on a Saturday this year, you have until Monday February 2 to complete your forms.

Just to be clear, employees get Form W-2, independent contractors get Form 1099-MISC reporting their income.

Since most of the people visiting this blog are more likely to have independent contractors than employees, we will focus on the Form 1099-MISC for the rest of this post.

Do you need to prepare Form 1099 for anyone in your business?

Basically, you must prepare a 1099 if you paid $600 or more to an individual to perform services for you.  Some examples would be web designers, eBay assistants, virtual assistants, affiliates, accountants, etc.

You should get the name, address and social security number (or Federal EIN) from any person you expect to send a 1099 for.

You need to send copies of the 1099 to the recipient, the IRS and the state tax department.

While you can buy the forms and prepare them manually, I prefer to use an online service called www.FileTaxes.com.

For more help, please read:

Should I File a W-2 or Form 1099?
Instructions for Form 1099-MISC

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• Reporting 1099 Income
• Final Tax Estimate for 2008 Approaching Quickly
• Recovery Rebate Credit for 2008