How to Create 1099 Forms for Workers: 2024 Compliance Guide

Meta description: Confused about 1099s for workers? Our 2024 guide walks you through contractor classification, IRS deadlines, and electronic filing options while avoiding costly payroll mistakes.

Wait - Are You Even Supposed to Issue 1099s to Employees?

Here's the thing that trips up 38% of small businesses according to the 2024 IRS Compliance Report: W-2 employees and 1099 contractors aren't the same. Mess this up, and you're looking at:

So let's get this straight first. Employees get W-2s. Contractors get 1099-NECs if you paid them $600+ - that's the magic number. Got a freelancer you paid $599? You're off the hook this time.

Step-by-Step: Creating 1099s That Won't Get Rejected

1. Collect the Right Info (Before December 31!)

• W-9 forms from every contractor
• Social Security Numbers or EINs
• Accurate payment records (QuickBooks users, you're golden here)

"We thought Venmo records were enough. The $8,200 penalty notice proved otherwise." - Construction company owner, 2023 audit case

2>Filling Out Boxes Like a Pro

The new 1099-NEC (Non-Employee Compensation) form isn't rocket science, but get these wrong and you'll be redoing them:

• Box 1: Total payments (include cash apps like Zelle?)
• Box 4: Backup withholding (only if they ignored W-9 requests)
• Box 5: Check this for statutory employees (a weird IRS exception)

Electronic vs Paper: What's Better in 2024?

The IRS processed 43 million digital 1099s last year - a 210% jump from 2020. Here's why switching makes sense:

But wait - some states like California now mandate e-filing for 50+ forms. Check your local rules!

The Hidden Trap: State Copies

Oh right, the IRS copy (Copy A) goes to them. But 28 states require their own copies - and no, photocopies won't cut it. Alabama even charges $25 per late state filing.

"We mailed 1099s to contractors by January 31 - thought we were done. Then Massachusetts fined us $1,200 for missing their copies." - E-commerce seller, 2023

2024 Changes You Can't Ignore

• New threshold: $600 aggregate payments (same as 2023, but some states are pushing for lower)
• Cryptocurrency payments: Still gray area, but the IRS is watching
• Payment apps: Venmo/PayPal issuing 1099-Ks at $600 (down from $20k)

Pro Tip: The 20-Minute Audit Check

Before hitting send:

1. Verify TINs match W-9s (use IRS TIN Matching if available)
2. Cross-check payments against accounting software
3. Check state requirements (11 states have earlier deadlines)

There you have it - creating 1099s that keep the IRS off your back. Now, should we talk about those pesky 1096 transmittals? Maybe next time...