Musings from an overworked translator

Deadline is approaching for issuing and filing 1099s January 26, 2009

January 31st is coming quickly (ok, this year the deadline is February 2nd, but let’s not split hairs). You might have noticed that you are receiving 1099s from your agency clients. I like to compare my total yearly income with theirs – just to be sure. I have caught errors twice now, so it bears repeating. Obviously this only applies to those persons who have their corporate domicile in the United States or file taxes here.

While January may seem a bit early to begin thinking about taxes, 1099-MISC filing deadlines are looming for businesses. This includes sole proprietors and S-Corps, which most translators are. Generally speaking, IRS 1099-MISC is the form used to report miscellaneous income that you paid to anyone in the course of your trade or business. You must issue 1099-MISC forms to any person that you have paid at least $600 in rent, services or other income payments. This includes independent contractors who have subcontracted work to – be it proofreading or translation work. We also generally only have to file a couple 1099s a year, which is a lot of work for just two or three forms.

The IRS website has tons of useful information, but unfortunately you can’t download forms that you can actually file. You can order forms from the IRS by calling 1-800-tax-form or ordering them off of the IRS website (again – do not download). The IRS suggests it typically takes at least two weeks for the forms to be delivered, but keep in mind that it may take longer. If you need the forms sooner, you usually can find them at libraries and post offices.

Once you have received the forms from the IRS or library or post office, you should fill them out (The 1099-MISC form is a multi-layered carbon form, so you should make sure the information you provide appears clearly on all of the copies.) and then mail all the copies to the appropriate recipients. You must provide Copy B to the person that you are reporting to the IRS (i.e., your independent contractor) by January 31st. Copy A of the 1099-MISC form is intended for the IRS. You are required to file it by February 28th if you are sending the form by mail. If you prefer to file electronically, you have until March 31st to file the form. Since the IRS loves its red tape, it requires you to file an additional form if you are filing Copy A of the 1099-MISC by mail. In this case, you must file an “Annual Summary and Transmittal of U.S. Information Returns” form. This summary is better known as Form 1096.

If this sounds like a lot of work to you, you are right. It is. My method of choice is visiting Filetaxes.com to issue my 1099-MISCs. It only costs $3.79 a form. You must initially set up a user name and password and can easily fill out 1099 and W-2 forms online. Once you have set up your account, your data is stored there indefinitely and can be accessed again next year. It takes less than a minute to fill out the form once you have the contractor’s social security number and address. Filetaxes.com does all the physical work of printing, filing, and mailing out the returns. I don’t have to get into my car to drive to the library or post office and have instant gratification (if you can call it that). This allows me to get back to business without having to worry about whether I messed up the form. I just filed my 1099s, and it took me three minutes – two of which were spent printing out the PDF copies for my records.

There are plenty of other similar services out there, such as www.ts1009.com. I’m curious to hear which service(s) you prefer using. If there is something better out there I’m all ears.