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I hate to quibble, but your explanation kind of puts the cart in front of the horse. Form 1099 (Miscellaneous Income) is actually "used by" the company that pays out the money to the contractor in the sense that they are the ones who fill out and file the form. That company doesn't get to deduct the fees they paid to you for your services as an expense of doing business (as part of their calculation of net profit) unless they file the Form 1099 with the IRS to report that you received those payments as miscellaneous income. As a taxpayer, you only "use" the form to the extent that you know you need to report that money as income on the Schedule C (Profit or Loss from Business) that you file with your Form 1040 (your annual income tax return) because it has already been reported to the IRS.
And just for the record, many other types of miscellaneous income you receive get reported by the entities who paid the money to you on variants of the Form 1099. For example, interest, dividends, state income tax refunds, and forgiven debts get reported on forms 1099-INT, 1099-DIV, 1099-G, and 1099-C, respectively.
-Fred Ridder
> Subject: Re: Payment Delay in 1099 Employment Contract
> From: trish -dot- robertson -at- comcast -dot- net
> Date: Tue, 19 Apr 2011 10:35:41 -0400
> To: philstokes03 -at- googlemail -dot- com
> CC: techwr-l -at- lists -dot- techwr-l -dot- com
>
> Hi, Phil,
>
> A 1099 form is an information return, though colloquially called a tax return, which is used to report income other than wages, salaries, and tips. It is used most commonly by independent contractors or non-employees who are usually paid hourly rates or lump sum fees. The contractor is responsible for paying her own federal, state, and social security taxes. There are no deductions taken out by the payor. This means the contractor should charge 30% - 50% more than usual rates for such jobs.
>
> Hope this helps.
>
> Best, Trish
>
>
> On Apr 19, 2011, at 10:03 AM, Phil wrote:
>
> > For the novices-but-keen-to-learn among us, could you explain what a '1099' means?
> >
> > Thx!
> >
> > Phil
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