I paid royalties to two people in 2013. The IRS requires a federal MISC 1099 report for any royalties paid which amount to over $10. The initial reports are due at the end of January.
I used www.speedEfiler.com to submit my MISC 1099s. It was a decent price at $5 per file, which included an electronic copy and a mailed copy to my people. However, I’ve since learned TurboTax will allow me to report the 1099s directly through their site.
There are 40 states that require state reporting when it comes to MISC 1099s and W-2s. You can look up each state’s requirements for reporting MISC 1099 and W-2s HERE.
If you pay someone else money, file the correct form for them to report that money on their taxes, and be respectful enough to turn it in on time! You don’t want to mess up your own taxes, or your client’s taxes.
When you file a MISC 1099 or a W-2, you are no longer responsible for paying taxes on that money. The person you paid is responsible for paying the taxes on the income they received.
So as you’re planning for next year’s taxes, be sure to collect a W-9 form on each person you plan to pay royalties to (or if you are paying them as an independent contractor). You don’t have to worry about holding out taxes for them. You just have to have their information and know exactly how much you paid them throughout the year.
DIY Business Taxes blog series
Part 1 TurboTax
Part 2 MISC 1099 & W-2s (you’re here!)
Part 3 Organizing Financial Information
Part 4a Author Media Webinar
Part 4b Author Media Webinar (still to come!)
Rachael Hartman is an experienced writer and author. She has worked as a full-time newspaper reporter, and as a freelance contributor to magazines. She writes high school Sunday school material for Word Aflame Press as well as lessons for Project 7 (P7) student-led Bible Clubs, and blogs for Lady by Design. She enjoys health and exercise, reading, art, and playing with her two dogs Darla and Danny. She owns Our Written Lives of Hope, an online bookstore and publishing house in which she helps others share the message of the hope of Jesus Christ and promotes holistic health. Check out her web site at www.owlofhope.com and link to her on Facebook.