How do I use Elance's 1099 Service?

Elance 1099 Service: Quick Overview

If you are a buyer based in the United States (U.S.) and you pay U.S. based providers for services, you may be required to submit the 1099 tax forms to the U.S. Internal Revenue Service (IRS) after the end of the tax year. For many buyers with multiple projects and providers, this can involve a great deal of paperwork. With Elance 1099 service, you no longer have to do any of this work yourself. And there is absolutely no cost for this service.

On projects that have been marked for 1099 service, Elance will issue the applicable 1099 forms on behalf of the buyer to the IRS and to the providers, after the end of the tax year. A summary report will be provided for the buyer as well.

Why Use 1099?

The IRS can impose penalties to the employer (e.g., Elance buyer) if an employer has paid an independent contractor (e.g., Elance provider) 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 a penalty of up to $50 per information return that is filed without the necessary information.

At no additional cost, Elance 1099 service helps the U.S. based buyer stay in compliance with these requirements. Elance gathers the necessary W9 information from the providers and issues the 1099 forms to the IRS and to the providers on behalf of the buyer. The 1099 service is free and is provided only for the projects where the buyer requests the service.

What is the 1099 Form?

The 1099-MSC or the Miscellaneous Income Form, is the U.S. Internal Revenue Service tax form issued to independent contractors who have earned more than $600 during a calendar year. This is the equivalent of the W-2 form (issued to direct employees) for freelancers. In order to issue the 1099 form, the issuing agency must request and collect the W-9 information from the independent contractor. Elance, as the issuing agency, will request the W-9 information for U.S. based providers working on projects where 1099 service is requested.

1099 form contains the following information:

* Service provider's name and address

* Service provider's Tax Identification Number; either the Social Security Number (SSN) or the Employer Identification Number (EIN)

* Amount of non-employee compensation

How it works 

Buyers can set their 1099 preference to request the 1099 service on all applicable projects:

1. Login to the MyElance Main Menu.

If you are not logged in, enter your Elance username and password.

2. On your Main Menu page click the 'Preferences' tab.

3. Click the 'For Buyers: Update 1099 Preference' link.

4. Set your preference to: Yes, please file 1099 tax form on my behalf