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Freelancer Services As Reported on 1099 Forms

April 8, 2018

 

 

One of the odder freelancing-related myths that I have seen floated is

that 1099 forms, and even 1099-MISC forms in particular, are meant

to document payment for services only. (They are rumored to be meant

to document payment yet more narrowly: for services when it will make

the payee subject to self-employment taxes but not otherwise, this despite

the explicitly noted possibility that certain employees may need the

simultaneous filing of both W-2 and 1099-MISC by their employers.)

 

Why is it such an odd one? The detailed 1099-MISC instructions at

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf are replete with direct

refutations of the notion. Most salient is the listing (in the instructions

for box 4, “Federal Income Tax Withheld”) of potentially applicable cash

boxes other than box 7. This legendary box will not necessarily need to

be filled in at all, given the potential applicability of the others: any to, in

principle, all of 1, 2, 3, 5, 6, 8, 10, or 14 (as well as 4 itself, of course).

 

In contrast to the payment for services (something that typically belongs

in box 7), certain reimbursements constitute likely examples of items that

should go in box 3, partly because they will likely not be subject to self-

employment tax. (In the 1099-MISC instructions, take a look at page 8,

the final box 7 paragraph, and also page 5, first box 3 paragraph.)

 

Interestingly enough, even the use of box 7 itself does not necessarily

involve the provision of services. The instructions read in part:

"Include oil and gas payments for a working interest, whether or not

services are performed"; fish purchases for cash and certain travel

reimbursements are also cited. Of course, box 7 is named

"Nonemployee compensation" rather than quite a bit more pointedly:

It is because the broader interpretation is what is wanted, even with just

this box.

 

 

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