In preparing U.S. federal income taxes, the filer must handle a number of forms. 1099s are a type of form known as an information form. The 1099s are generated by businesses and other entities to document financial transactions that they have conducted during the previous tax year. The business or other entity files the 1099 forms with the IRS and provides a copy to the taxpayer to assist him in calculating his income from all sources for his federal income tax return. Among the most common 1099 forms are 1099-MISC forms, which are issued to independent contractors such as freelance writers. However, there are many types of 1099s. Some common 1099 forms include 1099-DIV, 1099-INT and 1099-C.
1099-MISC is the form provided to independent contractors to report their earnings from a particular company. Each company provides a separate 1099 to the contractor and reports the same information to the IRS. The contractor is responsible for totaling up the earnings from various 1099-MISC forms, as well as paying self-employment and other income tax obligations. Form 1099-MISC is also used to report prize awards. Form 1099-MISC is generally filed for earnings of $600 or more; however, there are exceptions.
Form 1099-DIV is a report of dividend and other investment income paid. In addition to ordinary dividends, Form 1099 includes non-taxable distributions, qualified dividends and federal gains. Any federal or foreign tax paid is also reported on form 1099-DIV. Investors must have received or reinvested at least $10 to receive a form 1099-DIV.
Form 1099-INT reports all interest income from a particular source for the tax year. Like form 1099-DIV, investors must have received at least $10 to receive a form 1099-INT. However, income that is owed but has not yet been paid is not reported on a form 1099-INT.
Form 1099-C is filed with the IRS and forwarded to an individual taxpayer whenever a creditor cancels or writes off a debt in excess of $600. In such cases, the canceled debt is counted as income, on which the recipient must pay taxes. The creditor may be a private corporation or a governmental agency, including the federal government.
Other 1099 Forms
Another common 1099 form is the 1099-G, which lists governmental payments such as state tax refunds and unemployment benefits. The 1099-R, which includes payments from varied sources as pensions, retirement and profit sharing plans, annuities, IRAs and insurance contracts, is also common. Less common 1099 forms are filed for income received from accelerated death benefits from an insurance policy and barter income. In each instance, the 1099 form is provided to the taxpayer and filed with the IRS.
Taxpayers should investigate the regulations for reporting and paying any applicable taxes on income reported on a 1099 form. Instructions for the various 1099 forms are available for download from the IRS website.
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