Any business or government entity that is required to file a federal Form 1099-MISC for services received from an independent contractor is required to report specific independent contractor information to the Employment Development Department (EDD). This information will be used to locate parents who are delinquent in their child support obligations. The independent contractor reporting requirements apply if you hire an independent contractor and the following statements all apply:

• You are required to file a Form 1099-MISC for the services performed by the independent contractor.
• You pay the independent contractor $600 or more OR enter into a contract for $600 or more.
• The independent contractor is an individual or sole proprietorship.
• For more information on the EDD New Employee Registry, check out DE-340.

SO HERE IS THE UGLY RULE FOR CALIFORNIA:

If all the above statements apply, you must report the independent contractor to EDD within 20 days of paying/contracting for $600 or more in services. You are not required to report independent contractors that are corporations, general partnerships, limited liability partnerships, and limited liability companies.

HOW UGLY IS IT ??

You must report information to EDD within twenty (20) days of either making payments totaling $600 or more or entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier. And because you have nothing better to do as a small business owner - report each independent contractor once each year.

WHAT FORM TO USE

If you are unable to determine when total payments made equal or exceed $600, you may estimate the dollar amount of the contract and check the box on the DE 542 that indicates "ongoing." If there is no set contract amount, you may report when the aggregate payments in a calendar year equal or exceed $600 and check the "ongoing" box.

Submit a paper Report of Independent Contractor(s), DE 542. A fill-in DE 542 can be downloaded if you have the Adobe Reader.  Forms may also be ordered on the Online Forms and Publications page or by calling their toll-free number 888-745-3886.

NOTICE:  The Report of New Employee(s) (DE 34) and Report of Independent Contractor(s) (DE 542) can also be filed online, using the E-Services for Business.  Read the directions on how to sign up for these services.  You will need to sign up and the EDD home page, under payroll taxes, "e-Services for Business".