Before you pay: collect a W-9
Ask every contractor for a completed Form W-9 before the first payment. It gives you their legal name, tax classification and taxpayer ID, which you need to file. Do not wait until January to ask.
Is the worker really a contractor?
Classification depends on the facts of the relationship, not on what you call it. New Jersey applies a strict test, so independent contractors generally need to be truly independent. If you control when, where and how the work is done, they may be an employee. Ask a tax professional or the Department of Labor if unsure.
Track payments during the year
Mark vendors as 1099 vendors in your accounting software and record payments to them in the right categories. Payments by credit card or payment app are reported by the processor, not by you, so know which payments you must report.
File in January
Form 1099-NEC is generally due to the contractor and the IRS by January 31 for the prior year. The dollar amount at which you must file has been $600 and has changed under recent legislation, so check the IRS instructions for the year you are filing. Certain states also require filings.
Keep the records
Keep W-9s, invoices and proof of payment. They protect you if the classification is questioned later.
Common questions
Do I issue a 1099 to a corporation?
Often not, with exceptions. Check the IRS instructions for your situation.
Can you prepare 1099s?
We track 1099 vendors in your books and prepare the data. We can also help with filing, as an add-on.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.