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1099 Service

About LimeExchange 1099 Service

LimeExchange provides 1099 Tax Form service to Buyers free of cost. You can choose 1099 service when you post your project on LimeExchange. We will obtain a W9 Tax Form from your Service Provider and file the 1099 on your behalf, keeping you in compliance with IRS requirements.

Every year in January, we will issue 1099 Tax Forms to your Service Provider and the IRS for all payments made by you during the previous year. We will also send you a consolidated receipt of all 1099 Tax Forms issued on your behalf.

Please note that LimeExchange 1099 service is only available when you select it at the time of posting your project.

1099 information  

Form 1099 is a U.S. Internal Revenue Service tax form, also called the ‘Information Return’.

Form 1099 or the 1099 Miscellaneous Income Form is the tax form sent to independent contractors to whom you have paid at least US $600 in the previous year. It is the freelance equivalent of the W2 form, which is sent to direct employees.

1099 Form contains the following information:

  • Provider's name and address
  • Provider's social security or tax ID number
  • Buyer's name, address, and telephone number
  • Buyer's federal ID number (EIN)
  • Amount of non-employee compensation

If you are a U.S. based Buyer who paid at least US $ 600 to a U.S. based Service Provider during a financial year, you are required to file Form 1099 with the IRS for each provider. For more information, you may visit http://www.irs.gov/ 

Who is a U.S. person?

Since 1099 is applicable to U.S. based persons only, it is important to know how that is determined. For U.S. federal tax purposes, you are considered a U.S. Person if you are:

  • An individual who is a citizen or resident of the United States
  • A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States, or
  • Any estate (other than a foreign estate) or trust.

Buyer's obligation

The IRS can impose penalties on you if you pay a Service Provider US $ 600 or more in a financial year and do not file Form 1099. It is the Buyer’s responsibility to file Form 1099, and not the Service Provider’s. You may be subject to a penalty of up to US $50 for each information return that is filed without the required information.

What is W9 Form?

A Buyer who is required to file Form 1099 with the IRS must obtain the correct taxpayer identification number (TIN) of the Service Provider to report the paid income. A Buyer collects this information by having the Service Provider complete Form W9.

Use our 1099 service even if you are paying less than US $600

We recommend that you choose our 1099 service, even if you are paying a Service Provider less than US $600. During the course of the financial year you may hire the Service Provider again, and could potentially pay more than US $600 to the Service Provider. Selecting 1009 service for every job posted is a no cost way to save headaches down the road.

If you opt for our 1099 service, we will collect a W9 Form from the Service Provider regardless of the amount that you pay to the Service Provider. We will only issue a 1099 Tax Form to the Service Provider or the IRS if you paid more than US $ 600 to the Service Provider within the financial year. 

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