Referred to as information returns by the Internal Revenue Service, this form contains the information regarding the income generated from self-employment, interest, dividend, real-estate, broker transactions and several other types of income. The IRS matches every 1099 form with the payee tax returns. The form has information like payee social security number and employer’s identification number. It a mandatory form to be filled by every one who receives compensation from any business. Either the company will fill it, or they will send it to the payee to fill it out. Every business must check their 1099 reporting form filing requirement every year.
There is a set of 1099 form, depending upon the kind of trade or business the payee is involved with. They are:
- 1099 B
- 1099 R
- 1099 S
- 1099 C
- 1099 DIV
- 1099 INT
- 1099 MISC
This tax form is sent to be filled by the brokers or barters. This form requires the details of loss and gain from any broker transactions like stock, bonds, derivative, etc. The barter exchange reports the fair market value of goods and services by members of the trade over a period of the year.
This form is filled to report distributions from retirement, profit-sharing plans, insurance, SEP, annuities of amount $10 or more.
Proceeds made from real estate transaction of $600 or more are to be reported in the 1099 R form to the IRS. This form is necessary to ensure that all the businesses are reporting their capital gains amount of each year’s tax returns.
The payer/business has to report the cancellation of debt, be it: home, student, credit card loan of $200 or more. Since you canceled the loan, you don’t have any debt to pay which makes the original debt an income, which need to be filed in the tax return.
If you own a depository of mutual funds, you will be issued the 1099 DIV Form to report your dividend and other distributions you received in the year.
The payer has to report the interest he has received on their compensation by an organization in the year in 1099 INT. The financial institutions like banks, brokerage firms, and mutual fund firms have to report their interest( 109$ or more) to the IRS.
This form is used by small business owners to report a wide variety of payments. When services like rents, reimbursement to independent contractors, are provided to your business by unincorporated vendors when the amount is 600 dollar or more per year. Non-business related services are not to be reported in this 1099 form.
KEY POINTS TO KEEP IN MIND WHEN REPORTING 1099 TAX FORM:
If you are a business who has to send out the form to the payer for filling it, make sure they have made no errors. In case if there is any mistake, ask the payer to rectify it immediately. If the form has been sent out to the IRS, tell them to fill out a new form, carefully.
If the businesses have not reported and sent out the form by the last date, the IRS will charge penalties. Even if you don’t receive a 1099 form by the time that it should have been, doesn’t mean you don’t have to report your income.
While filling out the form, keep in mind that some states have income tax too. If you skipped or missed 1099 on your return, the state would charge you the tax money along with the IRS.
Every person or business who receives an income must file the 1099 tax form to declare it. If they fail to do so, they might be penalized. To gain an insight into the 1099 form and various other tax forms, you can seek help from a credible online source which will help you in providing an adept solution for organizing and filling all the forms as per IRS requirement.