Form 1099

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Form 1099 is one of several IRS tax forms (see the variants section) used to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Form W-2 is used instead). The term information return is used in contrast to the term tax return although the latter term is sometimes used colloquially to describe both kinds of returns.

Significance for payee's tax return

Payees use the information provided on the 1099 forms to help them complete their own tax returns. In order to save paper, payers can give payees one single Combined Form 1099 that lists all of their 1099 transactions for the entire year. Taxpayers are usually not required to attach Form 1099s to their own Federal income tax returns unless the Form 1099 includes a report for Federal income tax withheld by the payer from the related payments.

The issuance or non-issuance of a Form 1099 in a particular case is not determinative of the tax treatment required of the payee. Each payee-taxpayer is legally responsible for reporting the correct amount of total income on his or her own Federal income tax return regardless of whether a Form 1099 was filed.

For a variety of reasons some Form 1099 reports may include amounts that are not actually taxable to the payee. A typical example is Form 1099-S for reporting proceeds (not gain) from real estate transactions. The Form 1099-S preparer will report the sales proceeds without regard to the amount of the taxpayer's "basis" in the real estate sold. (Basis is usually the amount of cost incurred by the taxpayer when he or she acquired the property, perhaps years before the sale.) The taxpayer's basis amount is deducted by the taxpayer (on his or her own tax return) from the proceeds amount to determine the gain (if any) on the sale.

In any case, the payee-taxpayer remains responsible for filing an accurate Federal income tax return.

Filing requirements

Each payer must complete a Form 1099 for each covered transaction. Four copies are made: one for the payer, one for the payee, one for the IRS, and one for the State Tax Department, if required.[1] Payers who file 250 or more Form 1099 reports must file all of them electronically with the IRS.[2] If the fewer than 250 requirement is met, and paper copies are filed, the IRS also requires the payer to submit a copy of Form 1096, which is a summary of information forms being sent to the IRS. The returns must be filed with the IRS by the end of February immediately following the year for which the income items or other proceeds are paid. Copies of the returns must be sent to payees, however, by the end of January.

The law provides various dollar amounts under which no Form 1099 reporting requirement is imposed. For some variants of Form 1099, for example, no filing is required for payees who receive less than $600 from the payer during the applicable year.[3] For Form 1099-MISC in particular, businesses are required to submit a Form 1099 for every contractor paid more than $600 for services during a year. This requirement usually does not apply to corporations receiving payments. See the table in the variants section for specific minimum amounts for each form.

The form is used to report income, proceeds, etc., only on a calendar year (January 1 through December 31) basis, regardless of the fiscal year used by the payer or payee for other Federal tax purposes.

Variants

As of 2015, several versions of Form 1099 are used, depending on the nature of the income transaction.

One notable use of Form 1099 is to report amounts paid to a non-corporate independent contractor for services (in IRS terminology, such payments are nonemployee compensation). The ubiquity of the form has also led to use of the phrase "1099 workers" or "the 1099 economy" to refer to the independent contractors themselves.[4]

In 2011 the requirement was extended by the Small Business Jobs Act of 2010 to payments made by persons who receive income from rental property.

Form 1099 is also used to report interest (1099-INT), dividends (1099-DIV), sales proceeds (1099-B) and some kinds of miscellaneous income (1099-MISC). Blank Form 1099s and the related instructions to the forms can be downloaded from the IRS website.

The following table provides information for each variant.[5]

Form Use Minimum amount at which form is issued Who issues the form
1099-A Acquisition or Abandonment of Secured Property Any amount Lender[6]
1099-B Proceeds from Broker and Barter Exchange Transactions Any amount Broker or barter exchange[7]
1099-C Cancellation of Debt $600 Lender[8]
1099-CAP Changes in Corporate Control and Capital Structure $100 million Corporation[9]
1099-DIV Dividends and Distributions $10 ($600 for liquidations) Investment fund company[10]
1099-G Government Payments $10 Government agency[11]
1099-H Health Insurance Advance Payments Any amount Provider of health insurance coverage[12]
1099-INT Interest Income $10 ($600 for some interest) Payer of interest income[13] (usually a bank, financial institution, or government[14])
1099-K Merchant Card and Third Party Network Payments $20,000 Banks and other payment processors[15]
1099-LTC Long-Term Care Benefits Any amount Insurance company[16]
1099-MISC Miscellaneous Income $600 for non-employee compensation ($10 for most others) Employer
1099-OID Original Issue Discount $10 Issuer of the debt instrument or broker[17]
1099-PATR Taxable Distributions Received From Cooperatives $10 Cooperative[18]
1099-Q Payment from Qualified Education Programs Any amount Administrator or bank that manages one's 529 plan or Coverdell ESA[19]
1099-R Distributions from Pensions, Annuities, Retirement Plans, IRAs, or Insurance Contracts $10 Custodian[20]
1099-S Proceeds from Real Estate Transactions $600 Person responsible for closing the transaction; if no one is responsible for closing the transaction, then in order: the mortgage lender, the transferor's broker, the transferee's broker, or the transferee[21]
1099-SA Distributions From an HSA, Archer MSA, or Medicare Advantage MSA Any amount Institution that administers the HSA or MSA[22]
SSA-1099 Social Security Benefit Statement Any amount Social Security Administration[23]
RRB-1099 Payments by the Railroad Retirement Board Any amount Railroad Retirement Board[24]
RRB-1099-R Pension and Annuity Income by the Railroad Retirement Board Any amount[25]:6 (no amount listed in Publication 575) Railroad Retirement Board

See also

External links

References

  1. IRS instructions for form 1099-MISC, including a guide to what payments must be reported.
  2. Topic 801 - Who Must File Electronically, Internal Revenue Service.
  3. Instructions for Form 1099-MISC (2012), Internal Revenue Service.
  4. Forbes, The Rise of The 1099 Economy: More Americans Are Becoming Their Own Bosses, http://www.forbes.com/sites/joelkotkin/2012/07/25/the-rise-of-the-1099-economy-more-americans-are-becoming-their-own-bosses/
  5. "What Is a Form 1099?". efile.com. Retrieved January 9, 2016. 
  6. "What do I do with Form 1099-A?". TurboTax. Retrieved January 9, 2016. 
  7. "Instructions for Form 1099-B - Main Contents". Internal Revenue Service. Retrieved January 11, 2016. 
  8. "When to Use Tax Form 1099-C for Cancellation of Debt". Retrieved January 11, 2016. 
  9. "Instructions for Form 1099-CAP - Main Contents". Internal Revenue Service. Retrieved January 11, 2016. 
  10. "Form 1099-DIV". Investopedia. Retrieved January 11, 2016. 
  11. "What Is a 1099-G Tax Form?". TurboTax. 2015. Retrieved January 11, 2016. 
  12. "Instructions for Form 1099-H - Main Contents". Internal Revenue Service. Retrieved January 11, 2016. 
  13. "Form 1099-INT". Investopedia. Retrieved January 11, 2016. 
  14. "Filing Tax Form 1099-INT: Interest Income". TurboTax. 2015. Retrieved January 11, 2016. 
  15. Wang, Jim (November 16, 2011). "What Are the Different 1099 Tax Forms?". Retrieved January 11, 2016. 
  16. "1099 LTC - IRS Form Reporting Long Term Care Insurance Benefit Payments Understanding IRS Form 1099 LTC". American Association for Long-Term Care Insurance. Retrieved January 11, 2016. 
  17. "What is IRS Form 1099-OID?". 1099FIRE. Retrieved January 11, 2016. 
  18. "Form 1099-PATR, Taxable Distributions Received From Cooperatives". Retrieved January 11, 2016. 
  19. "What Is IRS Form 1099-Q?". TurboTax. 2015. Retrieved January 11, 2016. 
  20. "Form 1099-R". Investopedia. Retrieved January 11, 2016. 
  21. "Instructions for Form 1099-S - Main Contents". Retrieved January 11, 2016. 
  22. "What Is IRS Form 1099-SA: Distributions from an HSA, Archer MSA, or Medicare Advantage MSA?". TurboTax. 2015. Retrieved January 11, 2016. 
  23. "How can I get a form SSA-1099/1042S, Social Security Benefit Statement?". Social Security Administration. Retrieved January 9, 2016. 
  24. "Form RRB 1099 Tax Statement General Information". U.S. Railroad Retirement Board. Retrieved January 11, 2016. 
  25. "Publication 575: Pension and Annuity Income, For use in preparing 2015 Returns" (PDF). Internal Revenue Service. Retrieved January 11, 2016.