How to Prepare a 1099 for a Contract Worker

Complete the Form

1. 1
   Obtain a 1099-MISC form from the IRS. You can print out the form's most current version at IRS.gov, the agency's official website.
2. 2
   Fill out your federal identification number. This is either your personal Social Security Number or your Employer Identification Number, depending on your business's structure.
3. 3
   Fill the contract worker's identification field out using his Social Security Number.
4. 4
   Enter the amount of money you paid to the contract worker throughout the year in box 7, which is titled "Non-employee compensation" on the 1099 form.
5. 5
   Write down how much federal or state income tax you withheld from the contract worker's pay in either box 4 or 11. Given the fact that you worked with an independent contractor, it isn't likely that you withheld any taxes.
6. 6
   Fill in the contact information fields for both your company and your contract worker. A phone number is only required for your business.
7. 7
   Enter the state where your company is located in in box 12. The IRS prefers that you use a 2-letter abbreviation for your state instead of writing out the full name.

Send the 1099 Form

1. 1
   Mail or give the 1099 to your contract worker no later than January 31 following the tax year.
2. 2
   Send Copy 1 of the 1099 to the worker's home tax revenue department no later than February 28. You do not have to do this if income tax is not deducted from the worker's pay in the state in which he or she resides.
3. 3
   Mail both Form 1099 and Copy A of the 1099 that you prepared for your contract worker to the IRS by February 28. If you complete your taxes electronically, the deadline is March 31st.
4. 4
   Keep Copy C of the 1099 for your own records. It is recommended that you retain copies of all of your tax documents for at least 4 years.