Receiving 1099 form and reporting it to IRS is not an uncommon thing. 1099 form is used to report various incomes other than wages, salaries and tips for which form W2 is used. 1099 forms are given to individual contractors for services rendered by them to small businesses. Businesses provide a 1099 form only if the individual contractor has earned an income of $600 and above. If not, then no 1099 form is required. However there are various 1099 forms for different purposes. Below is the description provided for 4 types of 1099 forms:
Form 1099 Misc – The Form 1099-MISC is used to report miscellaneous income for individuals and companies who have been paid $600 or more in non-employee service payments during a calendar year. In other words, Form 1099 Misc is usually given to independent contractors such as attorneys, freelancers, health care service, performers, rent and etc who have provided their services to the company and in return have received compensation of $600 and above. 1099 forms are issued by the government to ensure that no income is gone unnoticed and hence is reported to the IRS for income tax purposes. Form 1099 Misc has to be given by the business to the payee by January 31 2012 and it also has to be reported to the IRS by April 2nd 2012, if you are filing electronically.
Form 1099 K – A New 1099 form which is debuting from 2012 onward is FORM 1099K which is used to report merchant card and third party network payments. The form is required for reporting payment transactions. Payment transaction is when a payment card (credit card) is used to make a payment or any settlement through a third party payment network such as e-bay, pay pal and etc. Thus, people who have a pay pal account, credit card account or any such similar account will receive 1099 K at the end of the year. Businesses would have to report 1099-K form only if they have gross receipts of $20,000 and above or 200 and above transactions.
Form 1099 Div – Form 1099 Div ‘dividends and distributions’ is the official form which is used to report all taxable capital gains and dividends paid to an investor, including those that have been re-invested in a given taxation year. The amounts stated on the 1099 Div form represent the amounts that fund companies are attributing to each investor’s investment return for the year and reporting to the IRS. Investors use Form 1099-DIV to help report income received from investments on their tax return each year.
Form 1099 INT – The official 1099 INT form is issued by payers of interest income to investors at the end of the year. Payers have to issue the form to those they paid at least $10 of interest during the year. The payers in this case include banks and savings institutions. Interest income reported on Form 1099-INT includes interest paid on savings accounts, interest-bearing checking accounts, and US Savings bonds. This Form is also used to report other tax items related to your interest income, such as early withdrawal penalties and federal tax withheld. The form has to be filed with IRS by April 2nd 2012.
The next filing season for 1099 forms starts January 1st 2012. Businesses have to ensure that they provide the correct and required 1099 forms to the contractors/payee by January 31st 2012. Businesses also have to efile 1099 forms with the IRS compulsorily. The filing deadline for paper filers is Feb 28th 2012 and for electronic filers is April 2nd 2012.