Elance 1099 Service: Quick Overview

If you are an employer in the United States (U.S.) and you hire a provider 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 employers with multiple jobs and providers, this can involve a great deal of paperwork. On jobs that require a 1099 form, if requested by the employer, Elance will issue the applicable 1099 forms on behalf of the employer to the IRS and to the providers at the end of the tax year. A summary report will be provided for the employer as well.

Why is a 1099 Form Required?

The IRS may impose penalties if an employer pays a provider 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 employer's responsibility to issue the 1099 form to the IRS, not the provider. Employers may also be subject to penalties for returns that are filed without the necessary information.

Elance’s 1099 service helps the U.S.-based client stay in compliance with these requirements. Elance gathers the necessary W-9 information from the providers and issues the 1099 forms to the IRS and to the providers on behalf of the employer as requested by the employer. The 1099 service is free and is provided only when the employer requests the service.

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 providers 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 employer must request and collect the W-9 information from the provider. Elance will request this information from the providers when 1099 service is requested.

The 1099 Form contains the following information:

• Service provider's name and address
• Service provider's Tax Identification Number (TIN) - either a Social Security Number (SSN) or a Employer Identification Number (EIN)
• Employer's name and address
• Employer's Tax Identification Number (TIN) - either a Social Security Number (SSN) or a Employer Identification Number (EIN)
• Amount of non-employee (or provider) compensation

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:

1. Click on the ‘Settings’ link located on the top right of the page
2. In the left navigation, click on the ‘1099 Preferences’ link
3. Set your preference to: ‘Yes, please file 1099 tax form on my behalf’