Am I suppose to withold taxes for independant contractors?

Question

I was womdering, if I had to withhold the taxes from my independant contractors that do work for me? Or do I send them a 1099 misc form at the end of the year, and leave them responsible for that? And one last question. How much money are you allowed to pay an independant contractor per year?

Answer 1

The only time you are required to withhold tax from the payments to an IC is if they fail or refuse to give you their taxpayer ID number, usually their SSN.  You give them a Form W-9 to get that information.  Then if you pay any one $600 or more for services rendered in any tax year you are required to prepare Form 1099-MISC and give them a copy.  One copy is filed with the IRS and you keep one copy for your records.  You send the IRS copies with a Form 1096 Transmittal Document.

As noted above, if an IC refuses to give you their SSN, you are required to withhold 28% tax and pay that to the IRS.  Paying that tax prevents the IRS from fining you for filing a Form 1099 without an SSN on it -- and filing one without the SSN means that you must pay the tax even if you didn't withhold it.  

Personally, on the rare occasion that I engage an IC for a business service, they don't get paid until they give me a completed Form W-9.

Answer 2

YEP, send them a 1099 at year end.

It's their responsibility.

No limit on money paid them, but if more than $600, you HAVE to file 1099 with IRS and provide them copies.

Answer 3

You only withhold taxes if you are their employer.  Talk to your accountant or hire one.

Answer 4

No, do not withhold taxes from an independent contractor.  It is their responsibility to pay taxes.  Send them a IRS-1099 form and report this in your taxes.  Pay as much as you want but, report every penny.

Answer 5

You dont with hold it. You would send them the forms and turn your part in. They can make as much as they want. But they do have to turn in their earnings at the end of the year. Hope that helps. If not cantact a tax aggent they will be able to help you more! :)

Answer 6

And if you suspect they are a non-resident alien, you are supposed to give them a W-8BEN and withhold 30% at the time they are paid.  The deposit schedule is nasty, so don't forget to send the money in.