Find Out What a Tax Form 1099 Is
You may need a 1099 form this year for a variety of reasons, regardless of whether you’re a contractor, a brand-new business owner, or an established small business. Use this blog post to discover more about what a Form 1099 is, how it can help you, what obligations you have, and other things if you’ve never needed one before or haven’t in a long.
What a 1099 Tax Form Is For
An IRS Form 1099 has two different functions:
- To record the money that individuals or businesses have spent or distributed
- To record the money that individuals or businesses have received
Whether you are the company that made the payment or the contract worker who received the cash reported on the form determines the purpose of the 1099 for your tax position.
Who Completes a 1099 Form?
It is your obligation to collect, fill out, and distribute the correct Form 1099 to any non-salaried employees your company has employed. The IRS is the source of this form.
You merely need to wait for your 1099 to be issued to you if you’re the contractor receiving the payments, in which case you don’t need to complete one.
16 Different 1099 Form Types
Uncertain of the 1099 type you must issue? Depending on the type of your profession or business, and while some 1099s are more often than others, you will utilize one of the following forms.
- Funds canceled in a home loan: 1099-A
- 1099-B – Profit from the Sale of Securities and Bartering
- 1099-C – Credit Card Debt Cancelled or Paid
- 1099-CAP – Profits on Shares of Corporation
- Dividends on savings or brokerage accounts are reported on Form 1099-DIV.
- 1099-G: Income from a government initiative (like unemployment)
- Interest from any type of financial account is reported on Form 1099-INT
- 1099-K – Cash received through a payment platform or a credit card (like Paypal)
- Catch-all funds are known as 1099-MISC that don’t fall under other form categories
- 1099-NEC – Income from a third party other than your employer
- 1099-OID – Amounts paid for securities that were sold below their face value
- Patronage payouts from a cooperative, 1099-PATR
- 1099-Q – Prepaid college plan funds disbursed
- Retirement account distributions are reported as 1099-Rs, and real estate transaction proceeds are reported as 1099-Ss.
- 1099-SA: Money deducted from your HSA
How to File a Tax Return Using 1099
You are not required to include a 1099 form in your tax return if you transmit it to another person. However, you must submit it to the IRS by February 15, 2023. This is the deadline for the 2022 tax year.
The information from 1099 must be included on your IRS form 1040 if the income it is documenting is taxable income.
Follow these straightforward guidelines for the typical Form 1099-NEC:
- Find box 1 on the form 1099-NEC; this is the payment amount you received from the payer.
- You can enter the money you received as a non-employee on Form 1040. Schedule 1 in either line 3 (business income) or line 8z (other income), as the form, 1099-NEC details it.
- To your chosen line on Form 1040, Schedule 1, add the sum from box 1 on Form 1099-NEC.
- Each type should have its own line on Form 1040, Schedule 1. For example, if you receive a 1099-C (due to the settlement of a credit card debt), you can put the amount in box 1 of the 1099-C in line 8c (cancellation of debt).
IRS Form 1099 Frequently Asked Questions
What Should I Do if My 1099 Is Incorrect?
You have a few alternatives if your 1099 has an error:
- If the payer makes a mistake, get in touch with them right away. When you file your tax return, they can send you a corrected copy.
- If you don’t receive 1099 (or one that has been amended) before the end of February, get in touch with the IRS. If you don’t receive your 1099 or amended form before the due date for filing your taxes, the IRS will get in touch with the payer on your behalf and give instructions for filing your tax return.
What Distinguishes 1099 From a W-2?
Employees who have income tax withheld from their paychecks receive W-2s from their employers. Businesses withhold these monies from employees’ wages and then pay them to the IRS on their behalf.
However, if you receive 1099, no taxes were deducted from your payment. Instead, the form informs you of the amount of income that would be subject to taxation.
Should I Get 1099?
Every form has different specifications. For someone you paid more than $600, for instance, you merely need to file a 1099-NEC. However, if you work for a financial institution, you must submit a 1099-INT to any customer who earned at least $10 in interest on their account.
With Your Part Time Accountant, Filing Your Taxes Will Be Easier
Whether you’re a small business owner or a contract employee, it might be difficult to get your taxes and 1099s in order. Your Part Time Accountant can help with that.
When you have our specialists on your side, even the trickiest tax circumstances are simple. We can help you with everything from reasonable payroll to simple bookkeeping to doing your own personal income taxes.