What is an IRS Form 1099? Goal, who gets one
A Form 1099 (or more) could land in your mailbox in February. You have to hang on to it because it can have a big impact on your tax life.
What is an IRS Form 1099?
A Form 1099 is a record that an entity or person other than your employer gave or paid you money. The payer fills out Form 1099 and sends copies to you and the IRS. There are several types of 1099 forms.
What is a 1099 form for?
You use your IRS Form 1099 to determine the income you received during the year and what type of income it was. You will report this income in different places on your tax return, depending on the type of income it was.
Who needs a Form 1099?
A Form 1099 is a record of income. All kinds of people can get a Form 1099 for different reasons.
Do I need a Form 1099 to report my taxes?
Just because you receive a 1099 tax form does not necessarily mean that you owe taxes on that money. You might have deductions that offset income, for example, or some or all of it might be protected depending on the characteristics of the asset that generated it. Either way, remember: the IRS knows.
What does a 1099 employee mean?
The term “1099 employee” generally describes a person who, in the eyes of the IRS, is an independent contractor, also referred to as self-employed or freelance.
A 1099 is therefore not the same as a W-2, which reports income paid to employees. If you get a 1099 from your employer, it’s a sign that your employer views you as an independent contractor rather than an employee. However, workplaces aren’t the only entities that can send you a 1099.
There are several types of 1099 tax forms (you can see all the IRS details here). The IRS calls them “information returns.” Here’s a basic rundown of the 1099 forms most likely to come your way.
You may receive a Form 1099-A if your mortgage lender has canceled all or part of your mortgage, or if you were involved in a short sale of your home. Why? The canceled debt is income in the eyes of the IRS – and it is generally taxable.
Form 1099-B covers income from the sale of several types of securities, as well as some types of barter that take place through barter exchanges, usually websites. In this case, the exchange could get you “1099” for the income you received. A 1099 is generally not required if you are bartering directly with someone, although you may need to report the income.
If you have persuaded a credit card issuer or other lender to pay off your debt for less than you owe, you are not completely off the hook. The amount the lender forgives is likely taxable income, and the 1099-C says it all.
Find out what else you can do for your business
You could receive a 1099-CAP if you own shares of a company that has been acquired or has undergone a material change in capital structure and you have obtained money, stocks or other property as a result. .
One of the most common flavors of this form, the 1099-DIV returns the dividends you have received. This does not include dividends on your stock account at the credit union. The IRS considers these interests, so they appear on another 1099: the 1099-INT.
If you’ve received money from the state, local, or federal government, including a tax refund, credit, or compensation, you might get one. If you were unemployed during the year, you might also have a 1099-G on your way.
If your long-term care insurance paid out benefits during the year, the insurer will likely file a Form 1099-LTC. If you received accelerated death benefit payments from a life insurance policy, these are also shown on this form.
In 2020, the IRS rolled out the 1099-NEC, to report the money they paid to people who worked for them but were not employees. In other words, if you were self-employed, self-employed, or had a side job, your clients should send you a 1099-NEC form instead of a 1099-MISC form in early 2021. (Learn more about what to do with IRS Form 1099-NEC.)
You may receive Form 1099-OID if you purchased bonds, notes, or other financial instruments for less than face value or redemption value at maturity. Typically, the instrument should have a maturity of more than one year.
If you belong to a co-op and have received at least $ 10 in patronage dividends, expect to see Form 1099-PATR in your mailbox.
You’ve saved up and saved up to create a decent 529 account for your child’s tuition… and it shows. Yes, the 1099-Q earns the money you, the junior or junior school, receive from a 529 plan. However, keep in mind that the earnings in a 529 plan are generally not subject to tax when used for qualifying education expenses, so for many people, the 1099-Q is just a record.
If you received distributions from a pension plan, pension plan, profit sharing program, IRA, or annuity, you may receive a 1099-R. (Remember, many pension plans are tax-efficientIf you took out a loan from your pension plan, you may need to treat it as a distribution, which means it could be on this form as well. in the form of permanent and total disability benefits under life insurance contracts.
Anyone responsible for closing a sale or trade in real estate provides you with this statement, reporting the proceeds. Again, the proceeds from the sale of your home or any other real estate are not necessarily taxable, so do your homework.
This is the form you will receive if you have received any distributions from your health savings account, Archer Medical Savings Account or Medicare Advantage. Keep in mind that HSA and Archer distributions are generally not taxable if you use them to pay for qualifying healthcare expenses. Again, for many people, a 1099-SA is simply proof that the money has left the account and is gone.