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WHAT IS AN IRS 1099 FORM?
A 1099 Form reports income from self employment earnings, interest
and dividends, government payments, and more. Here are the
details.
The 1099 form is a series of documents the Internal Revenue Service (IRS) refers to as
"information returns." There are a number of different 1099 forms that report the various types of income you may receive throughout the year other than the salary your employer pays you. The person or entity that pays you is responsible for filling out the appropriate 1099 tax form and sending it to you by Jan.
31.
INTRODUCTION
If you are a worker earning a salary or wage, your employer reports your annual earnings
at year-end on Form W-2. However, if you are an independent contractor or self-employed you will receive a Form 1099-MISC from each client that pays you at least $600 during the
tax year.
INDEPENDENT CONTRACTOR INCOME
For example, if you are a freelance writer, consultant or artist, you hire yourself out to
individuals or companies on a contract basis. The income you receive from each job you
take should be reported to you on Form 1099-MISC. When you prepare your tax
return, the IRS requires you to report all of this income and pay income tax on it.
INDEPENDENT CONTRACTOR INCOME
When you own a portfolio of stock investments or mutual funds, you may receive a Form 1099-DIV to report the
dividends and other distributions you receive during the year. These payments are different than the income you earn from selling stocks.
Rather, it is a payment of the corporation’s earnings directly to shareholders.
1099S FOR INTEREST AND DIVIDENDS
Other types of investments you have may pay periodic interest payments rather than dividends. These interest payments are also
taxable and are reported to you on Form 1099-INT. Commonly, taxpayers receive this form from banks where they have savings
accounts.
1099S FOR INTEREST AND DIVIDENDS
The federal and state governments are equally responsible for reporting income that
it pays to taxpayers. Government agencies commonly use Form 1099-G to report the
state income tax refunds and unemployment compensation you receive during the year.
GOVERNMENT PAYMENTS
If you receive unemployment income, you must include the entire amount your state reports on the 1099-G form in your taxable
income. However, you only include your state refund in income if you claimed a deduction
for it in a prior tax year.
GOVERNMENT PAYMENTS
When you withdraw money from your traditional IRA, in most cases it is taxable.
You will receive a Form 1099-R that reports your total withdrawals for the year before
you prepare your tax return.
WITHDRAWALS FROM A RETIREMENT ACCOUNT
The form also covers other types of distributions you receive from pension plans,
annuities and profit-sharing plans. Sometimes the 1099-R will show the taxable amount of the distribution on the form itself
and will report the amount of federal tax that was withheld.
WITHDRAWALS FROM A RETIREMENT ACCOUNT
Sometimes, transactions can increase your taxable income even when you don’t receive
a payment. This commonly occurs when a creditor cancels a portion of your
outstanding debt. When this happens, the IRS treats the debt cancellation as income
which may be taxable to you.
THE 1099-C FOR DEBT CANCELLATIONS
For example, if your credit card company no longer requires you to pay your outstanding
balance, it may send you Form 1099-C to report the amount of debt it cancels and you may need to report this amount on your tax
return.
THE 1099-C FOR DEBT CANCELLATIONS
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