For Your Payees: Understanding 1099 Tax Reporting
This blog is part of Hyperwallet’s “For Your Payees” resource series. These monthly articles are designed to provide your payees with important information on various components of Hyperwallet’s payout technology. For more payee-focused tips and content, please follow Hyperwallet’s dedicated payee support handle on Twitter at @AskHyperwallet.
Taxes need no introduction. We need money to live, eat, entertain; it’s an essential part of our daily life. In order to spend money, we are required to earn it. It’s not surprising then that bringing in a steady income is the primary purpose for most individuals; we all strive to make enough money so that we can live comfortably within our means, and in some cases, splurge on some luxury items every now and then. So, why do we have to pay taxes? Taxes are necessary so our government can provide public services, such as education, health, public order and safety, improve or build infrastructure, and more. That’s why, when individuals start earning beyond a certain minimum, they are required to pay taxes to help contribute to the common good. Which brings us to the topic of today’s For Your Payee resource deep-dive: tax forms.
Making Sense of Payee Tax Forms
There are a number of important tax forms that your payees will want to familiarize themselves with during the upcoming U.S. tax season. First, the Internal Revenue Service (IRS) requires a W-9 tax form be completed by independent contractors, consultants, or other self-employed workers. It is used to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file information on your return with the IRS. Your Social Security Number, if you are an individual, or your Employer Identification Number, if you are a business, as well as your first and last name, and address are required so the IRS can correctly identify you.
In the case of contract workers, information from the W-9 form is used to generate another tax documentation: the 1099 form. The documentation, which is used to file income tax with the US government, is what the IRS refers to as an information return. While there are multiple 1099s available, the most common type, is the 1099-MISC. This form is used to report earnings such as prizes, commissions, awards, fee compensation, or any other kind of non-salary, taxable income exceeding $600 USD.
What Payees Can Expect from Hyperwallet’s 1099 Tax Reporting
W-9 Forms need to be completed by December 31st of the current tax year in order to avoid delays and potential fines from the IRS.
These forms are made available for payees in Hyperwallet’s secured Pay Portal Payout Experience (1099 Tax Reporting functionality is not supported in the Embedded Payout Experience). They will be automatically made available when your organization sets up your account.
Tax time doesn’t have to be tricky for your payees. For more end-user assistance with Hyperwallet’s 1099 Tax Reporting feature, feel free to have payee’s tweet @AskHyperwallet for direct assistance or instruct them to visit our dedicated payee support page.
Are you an enterprise or marketplace interested in learning more about Hyperwallet’s integrated tax filing functionality? Then check out our Tax Reporting product feature blog to learn more.
*The information in this article does not constitute tax advice and should not be relied on as such. You should always obtain independent, professional accounting, tax, financial, and legal advice before engaging in any transaction.