IRS Form 1099 : Why You Should Keep An Eye on It !
What is a 1099 form ?
The IRS Form 1099 is a series of documents the Internal Revenue Service (IRS) that report the various types of income a taxpayer ( the recipient of the 1099 form) may have received throughout the year other than the salary . This is one form that arrive , generally , in late January or early February. So , when it arrives , take it seriously .Apart from your Social Security number, 1099 Form intimates various kinds of income credited to you during the year . For example , it may include information about
- the interest receipt
- Any consulting fee, you received or
- were paid some other kind of income.
Now , once the income is in this form,means it is known to IRS . So if your income reported on tax return is less than the income shown on this form , IRS will raise a flag while processing your return.
Types of 1099 Forms
There are several types of 1099 tax forms created by the IRS .A summary about following sixteen types of Form 1099s will help you understand their purpose and why you should give attention to .
The Form 1099-A is a reporting form for mortgage lender So , if you cancelled your mortgage with him , or you a short sold home, the mortgage lender will report to IRS and a copy will be forwarded to you.
If you get income from the sale of securities, or done some transaction through bartering exchanges websites, Form 1099B will be issued by the payer exchanges.
Form 1099-C will be issued by credit card issuer, in case it forgives any debt .Because the that forsaken amount of debt is your income and IRS will match your tax return.
If you hold shares of a corporation that was acquired and you received some consideration for the stock or other property as a result, you will get Form 1099-CAP.
The for 1099-DIV reports dividends ,however, it doesn’t include dividends on your share account at the credit union.
You will get Form 1099G ,if you received money from the state, local or federal government — including a tax refund, credit or offset — you might get one of these.
Form 1099-INT will be issued if you earned more than $10 in interest from a bank, brokerage or other financial institution.
Form 1099-LTC is issued by insurer ,if you are paid long-term care insurance or the accelerated death benefits of a life insurance policy.
This 1099 misc form is for many types of income including Income from prizes and awards .
This is newly introduced form .If you employed freelancers or people who were self-employed you should send a Form 1099-NEC instead of a Form 1099-MISC in early 2021 to all those freelancers .
Form 1099-OID is issued to you if you bought bonds, notes or other financial instruments at a discount to the face value or redemption value at maturity.
If you belong to a co-op and received at least $10 in patronage dividends, expect to see Form 1099-PATR in your mailbox.
the Form 1099-Q is for reporting earnings in a 529 plan even though the earnings in a 529 plan are generally not subject to tax as long as earnings are used for qualified education expenses.
If you got distributions from a pension, retirement plan, profit-sharing program, IRA or annuity, you might receive a 1099-R. (Remember, many retirement plans are tax-advantaged, so this form might be simple record-keeping on behalf of the IRS.) If you took a loan from your retirement plan, you might have to treat it as a distribution, which means it might be on this form, too, as well as permanent and total disability payments under life insurance contracts.
Anybody responsible for closing a sale or exchange of real estate furnishes this statement to you, reporting the proceeds. Again, the proceeds from the sale of your house or other real estate aren’t necessarily taxable, so do your homework.
This is the form you’ll receive if you took any distributions from your health savings account, Archer medical savings account or Medicare Advantage. Remember, HSA and Archer distributions generally aren’t taxable if you use them to pay for qualified health expenses. So again, for many people a 1099-SA is simply proof that the money left the account and went to you.
The Form 1099-MISC, is most common and can cover just about any kind of income. In fact, apart from wages, whatever you were paid is likely to be reported on a Form 1099. Companies big and small churn them out.
Social Security Number & Form 1099
How do the income is identified with its earner ? It is easy. The social security number is the identification of income with the recipient of income . So , it is very easy for IRS to catch the discrepancies in income reported on the tax return and the income reported on irs 1099 form. In fact, it is almost guaranteed that in case of discrepancies in income in tax return vis-a-vis 1099 , IRS will propose an audit or a tax notice .Read what does IRS audit mean? Since the social security number is the common thread, it does not matter that issuer has your old address, the information will be reported to the IRS . It is better that payers have your correct address. so you get a copy for IRS Form 1099. You can update your address directly with payers. You should file an IRS change of address Form 8822. Read a guide by IRS pdf
Should You Ask Issuer for 1099 Form ?
How to get a 1099 form? Basically , the income , which you already earned and know , does not require a 1099 reference. However , the 1099 Form is a very good source to check for certain kinds of income that you may not know you have earned or a very likelihood of missing . For example dividend income or some miscellaneous income .
What to do if you did not receive the 1099 ?
It is suggested that if you ask for it specially if don’t receive a Form 1099-R which is used for reporting on distributions from pensions, annuities, retirement or profit sharing plan. Better than asking an issuer for a Form 1099 is to get a transcript of your account from the IRS. It should show all Forms 1099 issued under your Social Security number.