If you are a client in the United States (U.S.) and you hire a freelancer who is a “U.S. Person” as defined by the Internal Revenue Service (IRS), you may be required to submit a 1099 tax form to the IRS at the end of the tax year. For clients with multiple jobs and freelancers, this can involve a great deal of paperwork. On jobs that require a 1099 form, if requested by the client, Elance will issue the applicable 1099 forms on behalf of the client to the IRS and to the freelancers at the end of the tax year. A summary report will be provided for the client as well.
Why is a 1099 Form Required?
The IRS may impose penalties if a client pays a freelancer who is a U.S. Person more than $600 for services within one calendar year and has not issued a 1099 tax form. It is the client's responsibility to issue the 1099 form to the IRS, not the freelancer. Clients may also be subject to penalties for returns that are filed without the necessary information.
Elance’s 1099 service helps U.S.-based clients stay in compliance with these requirements. Elance gathers the necessary W-9 information from the freelancers and issues the 1099 forms to the IRS and to the freelancers on behalf of the client. The 1099 service is free and is provided only when the client completes the necessary 1099 information.
You are considered a U.S. person if you are:
An individual who is a U.S. citizen or a U.S. resident alien.
A partnership, corporation, company or association created or organized in the United States or under the laws of the United States,
An estate (other than a foreign estate), or
A domestic trust (as defined in U.S. tax regulations).
What Is the 1099 Form?
The 1099 Form, otherwise known as 1099-MISC or the Miscellaneous Income Form, is the Internal Revenue Service’s tax form issued to U.S. based freelancers who are U.S. Persons who have earned more than $600 during a calendar year from an individual client. In order to issue the 1099 form, the client must request and collect the W-9 information from the freelancer. If you sign up for Elance’s free 1099 service we will take care of everything for you.
The 1099 Form contains the following information:
Freelancer's name and address
Freelancer's Tax Identification Number (TIN) - either a Social Security Number (SSN) or a Employer Identification Number (EIN)
Client's name and address
Client's Tax Identification Number (TIN) - either a Social Security Number (SSN) or a Employer Identification Number (EIN)
Amount of non-employee (or freelancer) compensation
Who gets a 1099?
Elance will generate all applicable 1099's for clients who requested the 1099 service, provided their tax details and made qualifying payments to U.S. freelancers. For more information on who should get a 1099, please visit the IRS website.
To download your 1099 form(s), please log into your account and follow these instructions:
Go to the Manage tab in the top navigation bar and select Transactions.
On the left hand side, click the Tax Records link.
Clients: Select the 'Client Activity' tab to download a copy of the 1099 form sent to your freelancers.
Freelancers: Select the 'Freelancer Activity' tab to download a copy of the 1099 form sent by your client.
Click the 1099-MISC link to open the 1099 form in PDF format.
For security purposes, you will be required to enter the last 4 digits of the tax identification number on file.
How it Works
To set your preferences to request the 1099 service on all applicable jobs, log in to your Elance account and follow the steps below:
Click on your username in the top right corner of the Elance website and select the Settings link.
In the left navigation, click on the 1099 Information link.
Set your preference to: Yes, please file 1099 tax form on my behalf.