The 1099 Form is filed on behalf of independent contractors in the United States annually as required by law. Independent contractors are persons or corporations that offer goods or services to another person or corporation within the terms of a contract or verbal agreement.

All those people or firms that make use of independent contractors need to file a 1099 Form for every contractor compensated an amount of six hundred dollars or more for the duration of a single year. As might be imagined, it is possible for thousands of such contractors to be hired, and so those who make use of more than two hundred and fifty must file all their forms electronically, that is almost always generated by software.

In addition to a 1099 Form, the 1096 is also required when it comes to paper copies sent through the mail. Payees typically use the information on their 1099s to finish their own tax returns, and will most likely use the Combined Form 1099 that records all the independent contracting they have done for the year.

Generally speaking, however, taxpayers aren’t required to attach a 1099 to their own federal income tax returns except under particular circumstances. Rules regarding 1099 forms are to be found in IRS Publication 1220.

Use of the 1099 has become very controversial in the current financial recession as more and more employers seek to save money by classifying an ever larger part of their workforce as independent contractors. The benefits to the employer in savings are essentially passed onto the worker, whose take-home or net earnings will take a substantial hit relative to that of a regular employee. But the practice has becoming increasingly widespread in the American economy today because really few candidates can afford to complain or hold out for a better job offer in such recessionary times.