1099 Overview

A 1099 is a tax form that is used to report certain types of payments made by companies to vendors during normal business operations. The payments are reported to taxing authorities to meet regulatory requirements—both federal and state—for each calendar year.

A 1099 can be issued to cover a variety of payment types that must be reported to a taxing authority. One of the most common business examples of an instance when a 1099 is needed is for unincorporated contractors or consultants who provide services to your company. Contact the IRS for more information.

Submit 1099 information to the taxing authority either on forms or magnetic media. The IRS requires electronic or magnetic media reporting for companies with 250 or more 1099s to submit. Also, if in previous years you reported your 1099 information electronically or on magnetic media, you are required to continue to report electronically or on magnetic media. The federal government allows a business to submit a test data file to make sure that they are creating their 1099 electronic or magnetic media file correctly.

When you report 1099 information to the government electronically or on magnetic media, you still must print 1099s on forms for your vendors. The information you report electronically or on magnetic media must match the information sent on 1099 forms to your vendors. Using GEMM—a separate piece of software, you can view 1099 information to verify that prepared information that is electronic or on magnetic media matches information on the forms.