If you are a Client in the United States (US) and you hire a Freelancer who is a “US 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. If you have multiple jobs and Freelancers, this can involve a great deal of paperwork. On jobs that require a 1099 form, if you request to participate, Elance will issue the applicable 1099 forms on your behalf to the IRS and to the Freelancers at the end of the tax year. A summary report will be provided for you, as well.
To request the 1099 service on all applicable jobs, log in to your Elance account and follow the steps below:
Click your username to the top right.
From the drop-down menu, select Settings.
Click Billing & Payment from the left.
Click 1099 Information to view, and if necessary, update details.
Why is a 1099 Form Required?
The IRS may impose penalties if you pay a Freelancer who is a US Person more than $600 for services within one calendar year and you have not issued a 1099 tax form. It is the Client's responsibility to issue the 1099 form to the IRS, not the Freelancer’s. As a Client, you may also be subject to penalties for returns that are filed without the necessary information.
Elance’s 1099 service helps you, as a US-based Client, to stay in compliance with these requirements. We gather the necessary W-9 information from Freelancers and issue the 1099 forms both to the IRS and to the Freelancer. The 1099 service is free and is provided only when you completes the necessary 1099 information.
A Freelancer is considered a US person if they are:
An individual who is a US citizen or a US 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 US tax regulations).
What Is the 1099 Form?
The 1099 Form will be sent to US based Freelancers as either a 1099-K or 1099-MISC (Miscellaneous Income Form). A 1099-K is issued to US based Freelancers who are US Persons who have engaged in more than 200 payment transactions on the platform resulting in more than $20,000 gross revenue. A 1099-MISC form is issued to US based Freelancers who are US Persons who have earned more than $600 during a calendar year from an individual Client. If the Freelancer does not qualify for a 1099-K, then the Freelancer will receive a 1099-MISC on behalf of Clients who have opted into Elance's 1099 service.
In order to issue the 1099 form, the Client must request and collect the W-9 information from the Freelancer. However, 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?
We will generate all applicable 1099's for Clients who requested the 1099 service, provided their tax details and made qualifying payments to US 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 or 1099-K 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.
What is my TIN?
For individuals and sole proprietors, your TIN is your Social Security Number (SSN).
For other entities, your TIN is your Employer Identification Number (EIN).
You must ensure that the name and TIN that you enter matches the name and TIN on record with the IRS.
If you require additional information regarding the TIN or if you do not have a TIN and need to apply for one, please contact the IRS for additional information.