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Do you receive a 1099 for workers’ compensation?

Classifying workers, as either independent contractors or employees, can determine whether a worker in America has access to good pay and protection from discrimination and benefits.

Phoenix Workers’ Compensation Attorneys who have experience assisting independent contractors in receiving compensation for a work-related injury note that independent contracting is becoming more predominant in the US.

As such, many Americans are asking questions such as “do you receive 1099 for workers compensation?”

What is 1099?

Don’t Blame Your Lawyer | Snow, Carpio & Weekley, PLC1099 is a record that a person or an entity other than your employer, paid or gave you money. There are about twenty different 1099s, but 1099-MISC is the most popular. All independent contractors who did work worth more than $600 for your business are supposed to receive 1099.

If you, as an independent contractor, do work worth less than $600 in a year, you will not receive 1099. The IRS makes a clear distinction between the non-employees and employees. And they are usually on the lookout for company’s who misclassify their employees as independent contractors to avoid paying Medicare’s and social security.

Who receives 1099?

Choice of Doctors | Snow, Carpio & Weekley, PLCIndependent contractors or freelancers often receive 1099-MISC from their employers. The 1099-MISC reflects the amount of money the employer has paid the independent contractor or the freelancer.

This form has the independent contractor’s social security number on it, meaning that the IRS wants to know if you received your payment. The IRS similarly wants to see if you will report that pay on you the tax return. Simply put, receiving 1099 does not necessarily mean that you, the independent contractor owes taxes for that income.

If your employer gives you 1099, that is a sign that they see you as a non-employee rather than as an employer. This means that if you get injured while at work, your employer will attempt to deny you compensation.

A 1099 example

Choice of Doctors | Snow, Carpio & Weekley, PLCLet us say you run a coffee shop, and you need to customize your coffee mugs. You hire a freelancer to come up with some designs. It looks amazing and only costs about $3,000. When tax season comes, it is your responsibility to send the freelancer a 1099 recording the amount you gave him and the services you received.

Now, let’s say your business is doing well, and you decide to expand. But this time around, you go to a corporation to customize your coffee cups because they will give you a discount.

The charge is $6,500 for a lot of coffee mugs. When tax season comes, you will not be required to send 1099 because they are a corporation.

Definition of a 1099 worker

A 1099 worker is:

  • Anyone you employ on a contract basis to do a particular job
  • Classified as a non-employee
  • Includes media consultants, copywriters, web developers, and graphic designers

However, if you hire an independent contractor through a third party, you may not be required to fill 1099.

Call to action

Whether you are an employer or an independent contractor, information regarding taxes and 1099 for workers’ compensation should be at your fingertips. Phoenix Workers’ Compensation Attorneys is a firm that prides itself in providing the best representation to its clients. They similarly offer financial advice, so you do not get in trouble with the IRS.

Call Today! (602) 532-0700

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