IRS Form 1099 : Why You Should Keep An Eye on It !

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

  1. the  interest receipt
  2. Any  consulting fee, you received  or
  3. 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 many varieties, including 1099-INT for interest,

  • 1099-DIV for dividends, 1099-G for tax refunds,
  • 1099-R for pensions, and
  • 1099-MISC for miscellaneous income.

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 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  Topic 157 – Change of Address–How to Notify IRS.

Should You Ask Issuer for 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.