On Deel, clients with US entities can easily file the income of their US contractors with the IRS using the 1099-NEC form, as well as provide their US contractors with their copy of the 1099-NEC.
Where to start?
When it comes to tax filing 1099s, the process is fairly simple.
Deel collects a W-9 Form from the contractor during the contract signing process. This form contains pieces of information required to file 1099s.
Before filling the 1099-NEC, make sure you have all the W-9 Forms of your US contractors. You can see the forms in the "Taxes" tab. W-9 Forms are not to be sent to the IRS, but you need them stored. The contractor's W-9 needs to be complete and up-to-date.
Entity Details for you as the Client also need to be correct, especially the Tax Identification Number (TIN) which is entered into the field “Registration number (TIN)” in Entity Details.
For whom do US clients need to file a 1099 form?
All US contractors who were paid $600 or more during a tax year. This refers to the total pay during the tax year, via Deel and outside of Deel.
- The total pay excludes the Deel fees and expenses, which Deel automatically deducts for payments through Deel.
- Relevant are the amounts paid between Jan 1st and Dec 31st of the tax year, not the invoiced amounts. E.g. If an invoice was issued in December, but your payment didn’t reach Deel until the following year, the amount of this payment rolls over into the total for the next tax year.
- On Deel, “US contractors” are both US citizens, regardless of tax residence, and non-US citizens who set their Tax Residence to US.
When to fill the 1099-NEC form?
1099s need to be filed from January 1st to January 31st following a tax year. After the January 31st deadline, you can still file on Deel, but penalties may apply. You can find the latest information from the IRS here.
How does it work?
- Contractors are listed per entity, and the entity filter shows one entity at a time. This means you will have to select an entity, file 1099 forms for the contractors belonging to it, and then repeat this for each of your US entities, if you have more.
- Entity details and W-9 forms can be updated if needed to make sure that 1099s can be successfully filed with the IRS.
- If you paid your contractors outside of Deel, you can easily add those amounts with a few clicks.
- Click Review and File, and make sure everything is in order.
- Then click "File to IRS" to send your paperwork to the IRS before January 31st.
Once filed, we’ll provide you and your contractors with a copy of your 1099s that you can download anytime, just in case you need it for your records.
Disclaimer: This article is not intended as tax advice. IRS regulations can be subject to change, so check for updates on www.irs.gov. Consult an accountant or tax advisor for help with tax forms and laws.