QandAs: Legal

What Is A 1099?

Answer:
A 1099 is a form that is used to report certain types of income to the Internal Revenue Service.

The form was created by the Internal Revenue Service (IRS) and is used in the United States income tax system for taxpayers to report various types of income on their tax return that do not fall under the categories of wages, salaries, or tips.

Three copies of the 1099 form are made: one for the payer, one for the payee, and one for the IRS. As an example, a 1099 form is typically sent to an independent contractor. Tax law in the United States requires businesses to submit a Form 1099 for every contractor that is paid $600 or more in a calendar year for their services. This requirement does not apply to corporations receiving payments.

Businesses who file 250 or more 1099 forms are now required to submit them electronically with the IRS. This electronic requirement applies separately to each type of 1099 form, not to the total number of 1099 forms. This confusion causes many filers to use third party information reporting software. If the payer falls under the 250 form level and they submit paper copies, they are also required to submit a copy of Form 1096. This form is a summary of the 1099 forms that are being sent to the IRS. A separate Form 1096 will need to the filed for each type of 1099 that the company has issued.

Taxpayers will use the information on the 1099 forms they receive to fill out their income tax returns. The taxpayer does not need to attach the form 1099 to their tax returns until the 1099 form also includes information on Federal income tax withheld by the payer.

As of 2008, there are many variations of the Form 1099, depending on the source of income, as follows:
- 1099-A: Acquisition or Abandonment of Secured Property
- 1099-B: Proceeds from Broker and Barter Exchange Transaction
- 1099-C: Cancellation of Debt
- 1099-CAP: Changes in Corporate Control and Capital Structure
- 1099-DIV: Dividends and Distributions
- 1099-G: Government Payments
- 1099-H: Health Insurance Advance Payments
- 1099-INT: Interest Income
- 1099-LTC: Long Term Care Benefits
- 1099-MISC: Miscellaneous Income
- 1099-OID: Original Issue Document
- 1099-PATR: Taxable Distributions Received from Cooperatives
- 1099-Q: Payment from Qualified Education Programs
- 1099-R: Distributions from Pensions, Annuities, Retirement Plans, IRAs, or Insurance Contracts.
- 1099-S: Proceeds from Real Estate Transactions
- 1099-SA: Distributions from an HAS, Archer MSA, or Medicare Advantage MSA.
- 1042-S: Foreign Person’s U.S. Source Income
- SSA-1099: Social Security Benefit Statement
- SSA-1042S: Social Security Benefit Statement to Nonresident Aliens
- RRB-1099: Payments by the Railroad Retirement Board
- RRB-1099R: Pension and Annuity Income by the Railroad Retirement Board
- RRB-1042S: Payments by the Railroad Retirement Board to Nonresident Aliens
- W-2G: Certain Gambling Winnings

This form will report proceeds for a single calendar year, regardless of the fiscal year used by the company. The forms must be filed with the IRS by the end of February following the end of the calendar year, but the taxpayer must receive their copies by the end of January. Regardless of whether or not the company issues the 1099, the taxpayer is still obligated to report the income. Also, keep ion mind that not all reportable income on a 1099 is taxable. An example would be gains on a real estate transaction on a personal residence, where some or all of the gain may be non-taxable.