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How to Differ Form 1099 and W2 Form? - Independent Contractors Vs Employees

Posted by Admin on 25. July 2017 06:19

Many taxpayers confuse themselves with 1099 form and W2 form as both the forms serve a different purpose for workers. Federal Income Tax forms 1099 and W2 are used to report an individual’s income which is earned from various sources throughout the financial year. But each form is issued under different scenarios and it requires different approaches when you file federal income taxes. If you are an independent contractor, you must file 1099-MISC Form; if you are an employee you must file W-2 Form with IRS. This article brief you the basics of W2 form and 1099 forms, so that it avoids the misperception while you file the tax.

Form 1099 Vs W2

About W2 Form

A Form W-2 is a Wage and Tax Statement, if you are an employee and receive a fixed salary or wage from your employer then you will receive Form W2. As per IRS, an employer must record their employee’s salary and tax information; in turn, report it to the employee on a W2 form. W2 Form contains the details of the employee’s earned income from the employer and this can be used in the calculation of the employee’s gross income. Also, it specifies the tax withholdings for the year which includes both federal and state taxes.

Form W-2 is due date

    •  -to your employee copy by January 31,
    • -Paper filing with IRS by February 28/29 and
    • -E-filing with the IRS by March 31.

About IRS 1099 Form

Form 1099 is used to hold the records of income that you receive as an independent worker while working for different sources. For instance, if you are a freelancer and working for multiple clients, then you may receive 1099-MISC Form from all the clients when they have paid you at least $600 during the financial year. An individual may receive different IRS 1099 series forms, depending upon their sources of income or money making activities.

Form 1099-MISC is due date

  • -to your recipient copy by January 31,
  • -Paper filing with the IRS by February 28/29 and
  • -E-filing with the IRS by March 31.

How Independent Contractor Differs from Employees?


  • As a self-employed or freelancer or contractor, you must calculate your own 1099-MISC taxes and need to file and submit with the IRS before the 1099 due date on a quarterly basis.
  • As a W2 employee, payroll taxes automatically debited from your salary then paid to the IRS through your employer or organization on the yearly basis.
  • If you are not sure about whether you are hired by independent contractor or employee, you can able to submit SS-8 Form with IRS. IRS people will find your status based on provided information, keep it in mind this SS-8 Form will take 6 months to process and returned.
  • Form 1099-MISC reports income of prizes won, rent payments, fishing boat proceeds, and attorney fees of $600 or more.
  • Form W2 reports total income, social security, and Medicare income and shows how much amount has been withheld from employee pay for federal income taxes to state and local taxes.
  • 1099-MISC Form specifies only the income you received from the client but does not contain the information related to the taxes which you have paid to the government.

Stay with us for more tax tips with Etax1099, Compare your income information on both the forms and apply for it accordingly. Etax1099 helps you to file 1099 taxes comfortably.  If you have any queries give us a call or send us a live chat or 24*7 basis on weekends also. You can Email us at anytime

10 Mid-Year Tax Tips for Small Business Owners and Operators

Posted by Admin on 26. June 2017 10:09

Cheers, all successful taxpayers for surviving the 2017-18 tax year. Now it is time to start planning for the next financial year. Isn’t it too early to start? But it is good enough to initiate our plans and prepare our tax details right now as it can reduce hectic last minute tax filing. Form 1099 refers to an “Information Return”. A person might get 1099 form through the mail when he/she had received income from various forms other than salary during the tax year. The earnings may be through self-employment, small business, interests, dividends, government payments and more. The firm or entity that pays you must file the appropriate 1099 form and send it to you by January 31, 2018.

Mid-Season Tax Tips for Small Business Owners 

When you are engaged in small business, then you must file 1099 form for the small business. Like individual taxpayers, small business owners can also enjoy the advantages of tax-saving techniques. Presenting you top ten strategies at the midyear for small business:

1. Stockpile on Depreciable Equipment:

As per the law, the maximum section 179 deduction for business equipment is restricted to $25,000 only, whereas 50% bonus reduction is not allowed this year. Hence at the time of tax return, you can increase the deductions, comprising retroactive extensions of favorable provisions.

2.  2.  A New Start-up:

If you are starting a new business, then you are allowed to currently deduct up to $5,000 of qualified start-up expenses. In order to qualify for this tax break, you must be officially open for business.

3.  3. Self-Employment Taxes are Partially Deductible:

When you are an employee and working for an employer, then the employer is responsible for paying half of your social security and medical care tax obligations. But if you are a business owner or self-employed you must pay all those taxes. Then you can claim a deduction equivalent of your employer’s portion through Schedule C or Schedule C-EZ.

4. Hire from your Family:

When you are looking to hire workers, your first choice must be your family members. Yes, when you hire your spouse and offspring you get significant tax savings. And for your children, while they declare the income their tax rate is much lower. Additionally, if you are paying health insurance for the family members then those expenses are also coming under tax deduction through Schedule C or Schedule C-EZ.

5. Business Trips as Vacation Time:

Generally, you can deduct travel expenses such as airfare, transportation charges, lodging and half of the meal costs if the primary purpose of the visit is business related. Note that certain expenses like sightseeing and jaunt are nondeductible.

6. Passion Towards Business:

 For some people, their hobby might have turned into a business. Nevertheless, if any loss is incurred, then they must portray that they are engaging in the activity of generating profit. Else it comes under the “hobby loss” rules. So ensure to submit records to stand up the challenge of IRS.

7. Rejoice with your Staff:

For business, there is a particular part of deductions that are related to entertainment and it is limited to 50% of the cost. However, for Labor Day picnic or July 4th when the entire workforce is invited you can have 100% of special tax law exception.

8. Fix Minor Repairs:

Under tax law, minor repairs are deductible whereas the cost of major improvements must be capitalized. On the other hand, when there is a major repair, IRS treats the entire cost as a capital improvement.

9. Claim Credit for Interest:

Many entrepreneurs and small business owners mostly depend on credit and loans. The IRS permits the small business owners and self-employed persons to claim tax breaks on interest and carrying charges on loans.

10. Make Estimated Tax Payments:

As a self-employed employer, it is your responsibility to take care of deduction from each paycheck. It is wise to make quarterly estimated payments else you might faint at the giant tax bill and also hefty underpayment penalties.

In order to prepare tax expenses for the financial year, you may need a professional assistance. To get legal advice related to your business, tax return preparation, filing Form 1099 for small business/self-employees you can connect with


Trump's New Tax Plan and Tax Cuttings in 2017 - How it Effects You

Posted by Admin on 3. June 2017 10:58

President Donald Trump’s campaign tax proposal has got some additional details with Treasury Secretary Steven Mnuchin and National Economic Council Director Gary updates in April 2017 which is listed below:

  • Recently updated tax proposal eliminates all the itemized and regular deductions (like home office deductions, state and local) which are the part of current tax code excluding the mortgage interest and charitable deductions.
  • The standard deduction will be twice to the offset the elimination of any other deductions and aims to simplify the tax filing process and usage of itemized deductions.
  • Revoking the Alternative Minimum Tax (AMT), 3.8% health care investment tax obligatory under Obama care and estate tax.
  • Trump’s tax plan additionally has 3 tax rate brackets, but there is a change in the level that differs from the prior proposal. It will be 10%, 25%, and 35%, hence the top tax bracket rate of 39.6% will be eliminated.
  • On the first $13,000/ $ 24,000 of income, there will be no taxes for single or married standard deduction.
  • The tax plan also includes tax relief for families with child care expenses.
  • Corporate rate will further come down to 15% and can expect a repatriation tax on funds for the companies that hold overseas.
  • It is assumed that the higher economic growth will offset the lower tax revenues. But the details are spelled out for the next year as the tax reform package is worked by Congress.


When you go through the above tax plan, it seems to have tax breaks for the rich people, but the controller of administration says that the changes in the tax plan would surely benefit the middle-class people.

 3 most attractive features that you can see in this Trump’s plan could be:

1.    1. Reduced corporate tax rate by 15% which is an expensive proposal.
2. Pass through provision will make any professionals to set up their legal tax-shelter.
3. Changes to the individual tax code

Assuming that the tax plans will get passed by the Congress, but most of the tax changes which are brought by President Trump will go effectively from 2018 as the tax plan for the 2017 year has been established already.  On the other hand, the houses of Republicans also have come up with a tax plan in order to cut personal and corporate taxes. But when compared with the proposed tax plan of the President, this is not found to be aggressive.

To get the proposed tax form across all the branches of the government, tax plan agreement must be compromised. This is because the President’s administration has not laid any actual plan to pay for the tax cuts and also there are no proposed net spending reductions to offset of Trump’s tax plan of $7 trillion cost.

According to the sources and when checking the proposed tax plan of President Trump, the tax plan will be more advantage for the middle-class people as they could find modest tax savings. On the other hand, the premium class taxpayers can see most in savings by lowering the highest marginal tax rate, increase in tax reduction and a repeat of the Alternative Minimum Tax.

On the whole, this proposed tax plan might increase the deficit by $10 trillion after 10 years. But reconciliation rules mention that law cannot increase the deficit over a decade by a single dollar. In short, middle-level tax-payers can foresee good tax savings whereas the high-income earners will be taxed heavily.

Complete PDF about TRUMPS PLAN

Stay tuned with etax1099 to get the updates of Tax Reform That Will Make America Great Again! And don’t forget: you can now e-file your quarterly business taxes on Forms 1099  with




March 31st - IRS 1099 Forms Deadline and Due Dates for 2016 Tax Year

Posted by Admin on 31. March 2017 02:25

Form 1099 is series of 23 documents; the IRS refers as information returns about income. We have different types of 1099 forms (1099-MISC, 1099-K, 1099-INT and etc) that reports the various type of incomes during the year. The due date for 1099s forms is March 31st, 2017. 

IRS 1099-MISC Form

1099-MISC reports all the miscellaneous income transactions, the total amount you received through the payments from a single person for your services over the year.  

1099-MISC Deadline and Due Dates

  • Recipient copy by January 31, 2017
  • IRS Paper Filing - Box 7 by January 31, 2017
  • IRS Electronic Filing – Box 7 by January 31, 2017
  • IRS Paper Filing – Other Boxes by February 28, 2017
  • IRS Electronic Filing – Other Boxes by March 31, 2017

IRS 1099-INT Form

1099-INT form reports all interest income from banks, financial institutions, government agency, and brokerages. You may have to report income tax on interests of these received payments. 

1099-INT Deadline and Due Dates

  • Recipient copy by January 31, 2017
  • IRS Paper Filing by February 28, 2017
  • IRS Electronic Filing by March 31, 2017

IRS 1099-K Form

1099 K form is used for reporting some payment transactions (debit, credit, third-party payment network transactions) for improving voluntary tax compliance. 

1099-K Deadline and Due Dates

  • Recipient Copy by January 31, 2017
  • IRS Paper Filing by February 28, 2017
  • IRS Electronic Filing by March 31, 2017
Today Efile your 1099s or ACA forms with IRS and avoid late fee or penalties. 

IRS Form 1099-MISC Instructions for Recipients in 2016

Posted by Admin on 8. February 2017 03:38

The 1099-misc form is used for reporting specific payment types made in business or trade. If you are self-employed or in business, you might have to submit form 1099-MISC to both the business or the person you are making payments to and to the IRS. You can even submit form 1099 online. If you are a businessman or an individual making payments to others then it is necessary for you to remain aware of 1099-MISC instructions. IRS form 1099-MISC instructions will help you in completing and submitting Form 1099 in the best way possible without making any mistakes.

When is Form 1099-MISC Needed?

Trading companies and business will have to fill out a 1099-MISC form for independent contractors, individuals and subcontractors and others in circumstances where:

Payment of $600 or more is made for:

·         Crop insurance proceedings

·         Cash payments to fishermen

·         Proceed payments made to lawyers

·         Health and medical care payments

·         Awards and prizes

·         Services like materials and parts

·         Rents and various other payments type not covered under any other document that reports all sorts of financial information.

Payment of $10 or more is made for:

·                       ·    Royalties, and

·                       ·    Broker payments in lieu of tax-exempt interest or dividends

Such payments need to be reported if the individuals receiving these payments are not corporations. In other words, these payments should be reported if the recipients are partnerships, individuals or limited liability companies treated as sole proprietorships or partnerships. Other different payment types made to corporations need to be reported by making use of Form 1099-MISC.

Form 1099-MISC Instructions- Steps for Preparing Form 1099-MISC

It is necessary for you to request that your contractors, vendors and other recipients of payments submit Form W-9 to you. Form W-9 is important because it will give you the legal address, name and the taxpayer identification number of the vendor. This information is of great importance because it is needed when preparing 1099-MISC form. Further in the form 1099-MISC instructions category, it is necessary for you to keep a track of all the payments that you make in a bookkeeping system. It is important that you know whether the payments fall under the categories that have been listed above. It is also necessary that you know whether the payments that you make to recipients reach the $600 or the $10 threshold. Finally, you must also have an idea about the specific amount that you pay to a recipient during a calendar year.

1099-MISC Deadline and Penalties for Late Filing


You must provide the payment recipient with a copy of Form 1099-MISC by February 1, 2017. The payments should be reported for the 2016 tax year. The IRS should receive Form 1099-MISC by February 28, 2017. You also have the option of filing Form 1099-MISC electronically by March 31, 2017. A 30-day extension for filing 1099 forms with the IRS can be requested by businesses. They can request the extension and file their 1099s using 8809 Form. It is to be noted that an extension should not be treated as the permission to use additional time for providing a recipient with form 1099.

If you are unable to follow the form 1099-MISC instructions properly, you are likely to make mistakes and even fall prey to the penalties of late filing form 1099-MISC. The penalties are as follows:

  • $60 penalty for late payment of form 1099 by 30 days and prior to 1st August.
  • $30 penalty for late payment of form 1099 by 30 days
  • $100 penalty for filing 1099 on or after 1st August.
  • $250 penalty for international filing failure.

When is Form 1099-MISC Due? Who do I send it to?

Posted by Admin on 31. January 2017 06:34

Every business needs some kind of help. Businessmen generally hire people for different operations. For example, graphic designers are hired for creating logos for the business and customer service agents are hired for dealing with the sales. If these individuals are used in the form of contractors, they should be given form 1099-MISC. IRS 1099 MISC form is used by the IRS for businesses to report the payments that they make to people who are not employees but who have been paid in exchange for their services. 

When is 1099 MISC Form Issued?

1099 MISC form is issued to someone in following situations:

  • The contractor is paid $600 or more in 2016 tax year.
  • Minimum $10 is paid in broker payments or royalties in lieu of tax-exempt interest or dividends.
  • $600 or more is paid for services, rents, awards and prizes, health care and medical payments, other income payments, cash payments and payments made for the national principal contract to estates, individuals or partnerships.
  • $600 or more is paid to a lawyer

IRS 1099 MISC is also used for reporting direct sales of minimum $5,000 of different consumer products to buyers for resale anywhere excluding permanent retail establishments. In addition to this, you will have to file form 1099-MISC for every individual from whom you have withheld some kind of federal tax income under backup withholding regulations irrespective of the amount you have paid.

10999 MISC Filing Due Date 2016 tax year

The 1099 MISC should be in the hands of the recipients by 31st January 2017. Nevertheless, if any substitute payments have been made in lieu of any proceeds or dividends to a lawyer, you have time till 15th February 2017 for getting the 1099 forms in the hands of the recipients. An important factor to consider in this circumstance is the mailing time. In case you are filing form 1099-MISC manually and you find no data in Box 7, you have time until 28th February 2017 for getting Copy A to the IRS. You have got time till 31st march, 2017 for getting Copy A to the Internal Revenue Service if you are filing form 1099-MISC electronically and you do not find any data in Box 7. In all circumstances, it is necessary for you to have the correct idea about 1099 MISC deadline. The 1099 MISC filing deadline is important in order to avoid penalties.

Who do I Send Form 1099-MISC? 

As per 1099-MISC instructions, you need to issue the form 1099-MISC to every individual who has received a payment of minimum $600 in services, rents, awards, prizes and other income payments. There is no need to e-file 1099 for personal uses. 1099 online filing is one of the best options that you can go for.

What Happens if You Forget to E-File a 1099 Tax Form

Posted by Admin on 27. January 2017 02:55

It is necessary for you to get form 1099 if you receive money from a government or business entity during the year which is reportable on your taxes. File 1099 online by taking the services of various online filing service providers. However, prior to considering to e-file 1099 make sure that you have a basic understanding of the form. It is in no ways a tax document but an informational form that needs to be filled out by an individual if he or she receives money during the year of reportable taxes. There are different varieties of 1099 forms and 1099 reporting to the IRS is very important. This is because with this kind of reporting the government is informed about the income you have even if you do not mention it in the tax return. However, if the IRS discovers that you have not reported additional taxes owed in the form, it will send notifications and charge penalties along with interest beginning right from the first day of the late tax payment.

Penalties for Not Filing a 1099 forms

The types of 1099 forms you may receive are as follows:


·         Form 1099-INT; informs the IRS about payers of interest income.

·         Form 1099-K; an IRS reports the payment card and third party network transactions.

·         Form 1099-MISC; reports payments to independent contractors. 


Efile your 1099 forms without penalties and late filing fee by January 31, 2017, for 2016 tax season.


Failure to E-File on Due Dates

The IRS will penalize companies for not filing 1099s before due date and for incorrect 1099s forms. Companies/Individuals should issue all 1099 forms including 1099-MISC forms by January 31 for the previous tax year. IRS 1099-K and 1099-INT forms are must issue by January 10. If filing by paper, businesses must file these 1099 forms with the IRS by February 28. If filing electronically, companies must e-file the 1099s with the IRS by March 31.

Penalty for Making Late Payments

There is a definite penalty for not filing 1099 and even for making late payments. You can always expect the Internal revenue Service to impose a penalty for late filing 1099. This penalty is around 0.5% per month or partial month during which the taxes remain unpaid. The penalty is generally capped at 25%. In case 1099 earning that you complete forget to mention on your tax return gives way to an understatement of the tax bill, the penalty for 1099 late filing increases to 20% accruing immediately. Therefore, if you are looking to avoid a penalty for not filing 1099-MISC then it is necessary for you to amend your tax returns. Make sure to go through the form carefully and include all taxes owed.

How to Correct a 1099 Form? Steps for 1099 Corrections

Posted by Admin on 20. January 2017 02:49

Form 1099 is basically an IRS or Internal revenue Service form that can be used by the taxpayers for reporting certain payments. There are different varieties of this form available for business owners and common individuals ranging from letters A to SA. Nevertheless, it is important for business owners to make use of Form 1099 MISC for reporting the money that they pay to the independent contractors. This form carries information regarding the business and independent contractor that is being paid the money. In the case of any error in the form, it is necessary for an individual to go for 1099 correction at an instant. There is a definite 1099 corrections deadline within which the revised form should be submitted to the Internet Revenue Service, independent contractor, and the state agencies.

how to correct 1099 form

How to Correct 1099 MISC Form?

1099 misc correction involves identifying the type of mistake or error as the first step. The 1099 correction form errors are of two types and they are Type 1 and Type 2. Type 1 error is incorrect payee name, code or dollar amount and Type 2 error is incorrect or missing taxpayer identification number. It can also be the reporting of an invalid address. Once the type of error is detected, the following steps need to be adhered to for correcting the erroneous information on the form.

  • Confirming the error type.  
  • Referring the original 1099 MISC during the corrections. Right information needs to be included as available on the original form.
  • Obtaining another 1099 form MISC from IRS.
  • Obtaining form 1096 from IRS which summarizes 1099 information.
  • Entering the correct information and checking the”corrected” box right at the top of the form.
  • Completing the correct information on 1096 form.
  • Mailing the revised copy of the form to the IRS and independent contractor.


Must Know this Tax Preparation Checklist for Filing Your 1099 Taxes 2016

Posted by Admin on 1. December 2016 04:41

Prior to beginning with the procedure of preparing income tax return, it is necessary for you to go through the tax preparation checklist. There are different categories in the 1099 tax preparation checklist and not all the categories will strictly apply to you. Therefore, what you need to do is select the category that applies to you and ensures that you have all the necessary information available. Once you are completely ready to efile 1099 online with the help of this checklist, you will be completely surprised to find the amount of time you will be saving by having all your information beforehand.

1099 Tax Preparation Check List

Important Inclusions of the 1099 Checklist

The 1099 checklist contains the following points that are important to be included when filing 1099 online.

Personal Information

It is necessary for the IRS to have a basic understanding of the individual filing taxes and the one who is covered in the tax return. This can be done by using the dates of birth and social security numbers of your dependents or spouse.

Information about Income

This will include the income from jobs, income from local and state income tax refunds or unemployment, investment income, alimony received and income from farming or business. The income received from the property sale, pension distributions, social security benefits and miscellaneous income. The adjustments to earnings also need to be included. There are different criteria that can help on reducing the income amount that is taxed and these include:


  • ·         Energy credits
  • ·         IRA contributions
  • ·         Student loan interest
  • ·         Moving expenses
  • ·         Medical savings account contributions
  • ·         Educator expenses
  • ·         Alimony paid
  • ·         Payments of self-employed health insurance payments


There are various other important points that also need to be considered when filing 1099 taxes before the deadline. Therefore, going through the complete checklist is very important.

What are the IRS Tax Return Filing Statuses? - Find Your Correct Filing Status

Posted by Admin on 10. November 2016 23:52

If you wonder what are the IRS tax return filing statuses then it is necessary for you to know that IRS tax return statuses are important. Your tax filing status can have a major impact on the tax benefits that you receive the tax amount that you pay and the standard deduction amount. It might also have an impact on whether you need to file federal income tax return. In this case you will need a federal tax filing status. 

IRS tax filing status

List of Five IRS Tax Filing Statuses

Basically, there are five different filing statuses on deferral tax returns. However, there are some important facts offered by the IRS in order to enable individuals in choosing the right and the best filing status. 

Marital Status

This is the marital status on the last date of the year and this is your filing status for the entire year. If you find that there is more than one filing status suiting your conditions, you must make the choice of a status that gives you the flexibility of paying the lowest taxes. However, keep one thing in mind and that is filing status for taxes is very important and therefore statuses need to be chosen carefully.

Single Filing Status

This generally applies for individuals who are unmarried, legally separated or divorced as per the state law.

Married Filing Jointly and Married Filing Separately

Married couples might file tax returns together by using this status. Then there is the married filing separately status for filing returns separately.

Head of Household

Head of Household status applies only for individuals who are unmarried and have made payments of more than half of the cost of home maintenance.

Qualifying Widow with Dependent Child

The status applies for spouses with dependent children while meeting other conditions. Determining your correct filing status is very important and this should always be kept in mind.

Alert: Efile your tax form 1099 online at etax1099.