What is a 1099s form ?
1099 type forms are primarily used for collecting information about payments for various services by various organizations. The reports submitted by the payers to the U.S. Internal Revenue Service (IRS)– as well as additionally with some state tax obligation divisions. A duplicate copy of the information in the prescribed form that starts with #1099s are additionally sent to individual taxpayers to assist them to complete their earnings from various resources and also to help compute their taxes accurately. Please also read IRS Form 1099 : Why You Should Keep An Eye On It !
Types of 1099 Forms
There are more than 20 variants of the 1099 form, yet the most common is the 1099-MISC reporting. This form is required only if the payments cross a limit of $600 in a calendar year to freelancers, self-employed and to independent contractors required reporting obligation on part of the payer in the Form 1099-MISC. Please note As a self-employed person you are required to report your self-employment income if the amount you receive from all sources totals $400 or more
Services That Are Covered by 1099-MISC
You need to issue Form 1099-Misc if payments above limit is made for services by the following types of professionals. (You don’t need to issue 1099s for payments made for personal purposes )
- Accounting professionals
- Garden enthusiasts
Other Important 1099s Forms
- Banks, as well as various other banks, use it to report investment earnings- Form 1099-DIV
- Report interest earnings- Form 1099-INT
- Lists government settlements like unemployment insurance and tax obligation reimbursements- Form 1099-G
- Settlements from annuities, pension plans, retirement and profit-sharing strategies- Form 1099-R
- Used whenever a taxpayer writes off debts exceeding $600- Form 1099-C
- Documents settlements from Qualified Education Programs.- Form 1099-Q
- Records Social Security settlements- Form SSA-1099
- Reports proceeds from estate-related investment as well as deals – Form 1099-S
Why 1099s Forms Important?
For payers who are obliged to report in Form 1099s , there is a deadline for filing Form 1099s with IRS. Those who get 1099s are expected to keep them as well as file duplicates of them with their personal tax return every April 15 or every quarter, whichever uses. The IRS matches a payee’s income tax return with received 1099s to discover any unreported or under-reported income on which self-employment tax obligation repayment is called for. Discrepancies will usually launch a tax audit and/or penalties.