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Form 1099

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Form 1099 is one of several IRS tax forms (see the variants section) used in the United States to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Form W-2 is used instead).[1] The term information return is used in contrast to the term tax return although the latter term is sometimes used colloquially to describe both kinds of returns.

The form is used to report payments to independent contractors, rental property income, income from interest and dividends, sales proceeds, and other miscellaneous income recipients to tax professionals. This has led to the phrases "1099 workers" and "the 1099 economy" to refer to those whose income is reported on Form 1099, in contrast to a "W-2 employee" who receives Form W-2.[2][3]

Blank 1099 forms and the related instructions can be downloaded from the IRS website.[4]

Significance for payee's tax return

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Payees use the information provided on the 1099 forms to help them complete their own tax returns. In order to save paper, payers can give payees one single Combined Form 1099 that lists all of their 1099 transactions for the entire year. Taxpayers are usually not required to attach Form 1099s to their own Federal income tax returns unless the Form 1099 includes a report for Federal income tax withheld by the payer from the related payments.

The issuance or non-issuance of a Form 1099 in a particular case is not determinative of the tax treatment required of the payee. Each payee-taxpayer is legally responsible for reporting the correct amount of total income on his or her own Federal income tax return regardless of whether a Form 1099 was filed.

For a variety of reasons some Form 1099 reports may include amounts that are not actually taxable to the payee. A typical example is Form 1099-S for reporting proceeds (not gain) from real estate transactions. The Form 1099-S preparer will report the sales proceeds without regard to the amount of the taxpayer's "basis" in the real estate sold. (Basis is usually the amount of cost incurred by the taxpayer when he or she acquired the property, perhaps years before the sale.) The taxpayer's basis amount is deducted by the taxpayer (on his or her own tax return) from the proceeds amount to determine the gain (if any) on the sale.

In any case, the payee-taxpayer remains responsible for filing an accurate Federal income tax return.

Filing requirements

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Each payer must complete a Form 1099 for each covered transaction. Three or four copies are made: one for the payer, one for the payee, one for the IRS, and one for the State Tax Department, if required.[5] Payers who file 250 or more Form 1099 reports must file all of them electronically with the IRS.[6] If the fewer than 250 requirement is met, and paper copies are filed, the IRS also requires the payer to submit a copy of Form 1096, which is a summary of information forms being sent to the IRS. However, 1096 is not required if 1099 form filed electronically. The returns must be filed with the IRS and sent to payees by the end of January immediately following the year for which the income items or other proceeds are paid.

The law provides various dollar amounts under which no Form 1099 reporting requirement is imposed. For some variants of Form 1099, for example, no filing is required for payees who receive less than $600 from the payer during the applicable year. For Form 1099-NEC in particular, businesses are required to submit a form for every contractor paid more than $600 for services during a year. This requirement usually does not apply to corporations receiving payments.[7] See the table in the variants section for specific minimum amounts for each form.

The form is used to report income, proceeds, etc., only on a calendar year (January 1 through December 31) basis, regardless of the fiscal year used by the payer or payee for other Federal tax purposes.

Variants

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As of 2015, several versions of Form 1099 are used, depending on the nature of the income transaction.

One notable use of Form 1099 is to report amounts paid by a business (including nonprofits) to a non-corporate US resident independent contractor for services (in IRS terminology, such payments are nonemployee compensation). The ubiquity of the form has also led to use of the phrase "1099 workers" or "the 1099 economy" to refer to the independent contractors themselves.[3]

In 2011 the requirement was extended by the Small Business Jobs Act of 2010 to payments made by persons who receive income from rental property.

Form 1099 is also used to report interest (1099-INT), dividends (1099-DIV), sales proceeds (1099-B) and some kinds of miscellaneous income (1099-MISC). Blank 1099 forms and the related instructions can be downloaded from the IRS website.

The following table provides information for each variant. Note that for those who have electronic filing of Form 1099 set up, the due date for the IRS is March 31 rather than the last day of February.[8][9]

Form Use Minimum amount to issue Issuer Date due to recipient Date due to IRS
1099-A Acquisition or Abandonment of Secured Property Any amount Lender[10] January 31 Last day of February[11]: 6 
1099-B Proceeds from Broker and Barter Exchange Transactions Any amount Broker or barter exchange[12] February 15 Last day of February
1099-C Cancellation of debt $600[a] Lender[14] January 31 Last day of February
1099-CAP Changes in Corporate Control and Capital Structure $100 million Corporation[15] January 31 Last day of February
1099-DIV Dividends and Distributions $10 ($600 for liquidations) Investment fund company[16] January 31 Last day of February
1099-G Government Payments $10 Government agency[17] January 31 Last day of February
1099-H Health Insurance Advance Payments Any amount Provider of health insurance coverage[18] January 31 Last day of February
1099-INT Interest Income $10 ($600 for some interest) Payer of interest income[19] (usually a bank, financial institution, or government[20]) January 31 Last day of February
1099-K Merchant Card and Third Party Network Payments $20,000 and 200 transactions.

Reduced in 2022 to $600 and no minimum number of transactions.[21]

Banks and other payment processors[22] January 31 Last day of February
1099-LTC Long-Term Care Benefits Any amount Insurance company[23] January 31 Last day of February
1099-MISC Miscellaneous Income $600 for most compensation ($10 for royalties) Payer January 31 Last day of February
1099-NEC Non-Employee Compensation[24] $600 Payer February 1 February 1
1099-OID Original Issue Discount $10 Issuer of the debt instrument or broker[25] January 31 Last day of February
1099-PATR Taxable Distributions Received From Cooperatives $10 Cooperative[26] January 31 Last day of February
1099-Q Payment from Qualified Education Programs Any amount Administrator or bank that manages one's 529 plan or Coverdell ESA[27] January 31 Last day of February
1099-R Distributions from Pensions, Annuities, Retirement Plans, IRAs, or Insurance Contracts $10 Custodian[28] January 31 Last day of February
1099-S Proceeds from Real Estate Transactions $600 Person responsible for closing the transaction; if no one is responsible for closing the transaction, then in order: the mortgage lender, the transferor's broker, the transferee's broker, or the transferee[29] January 31 Last day of February
1099-SA Distributions From an HSA, Archer MSA, or Medicare Advantage MSA Any amount Institution that administers the HSA or MSA[30] January 31 Last day of February
SSA-1099 Social Security Benefit Statement Any amount Social Security Administration[31] January 31 N/A
RRB-1099 Payments by the Railroad Retirement Board Any amount Railroad Retirement Board[32] January 31 N/A
RRB-1099-R Pension and Annuity Income by the Railroad Retirement Board Any amount[33]: 6  (no amount listed in Publication 575) Railroad Retirement Board January 31 N/A
  1. ^ An exception to the requirement to issue Form 1099-C is when a student loan has been discharged under the terms of the Tax Cuts and Jobs Act of 2017 due to the borrower's death or permanent disability. The IRS has notified lenders and servicers of such loans that they should not issue this form regardless of the amount discharged.[13]

History

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The War Revenue Act of 1917 required every entity to report certain payments made to another entity. Payments subject to reporting included payments of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable gains, profits, and income. Payments to an entity were required to be reported if the payments totaled at least $800 during the year. The payor was required to report the name and address of the payee and the total amount of payments on Form 1099 and sent to the Internal Revenue Service by March 1 of the year following the payments. The payor was required to include Form 1096, a letter of transmittal and affidavit certifying the accuracy of each Form 1099.[34][35]

See also

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  • IRS instructions for form 1099-MISC, including a guide to what payments must be reported

References

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  1. ^ "Comprehensive 1099 Guide -". taxsaversonline.com. 2021-12-16. Retrieved 2021-12-24.
  2. ^ Peek, Sean (22 April 2019). "W-2 vs. 1099 Contractors: Tax Differences Explained". United States Chamber of Commerce. Retrieved April 13, 2023.
  3. ^ a b "The Rise of The 1099 Economy: More Americans Are Becoming Their Own Bosses". Forbes.
  4. ^ "About Form 1099-MISC, Miscellaneous Information | Internal Revenue Service". www.irs.gov. Retrieved 2024-09-08.
  5. ^ IRS instructions for form 1099-MISC, including a guide to what payments must be reported.
  6. ^ "Topic 801 - Who Must File Information Returns Electronically". Internal Revenue Service. Retrieved January 24, 2016.
  7. ^ "Instructions for Forms 1099-MISC and 1099-NEC (2022)". Internal Revenue Service. Retrieved April 13, 2023.
  8. ^ "What Is a Form 1099?". efile.com. Retrieved January 9, 2016.
  9. ^ "What If I Have to Issue a 1099 Form?". efile.com. Retrieved January 16, 2016.
  10. ^ "What do I do with Form 1099-A?". TurboTax. Retrieved January 9, 2016.
  11. ^ "2015 General Instructions for Certain Information Returns" (PDF). Internal Revenue Service. Archived from the original (PDF) on March 15, 2015. Retrieved October 4, 2016.
  12. ^ "Instructions for Form 1099-B - Main Contents". Internal Revenue Service. Retrieved January 11, 2016.
  13. ^ "Notice 2022-1: Instructions for Lenders and Loan Servicers Regarding Certain Discharged Student Loans" (PDF). Internal Revenue Service. December 21, 2021. Retrieved January 14, 2022.
  14. ^ "Acquisition or Abandonment of Secured Property and Cancellation of Debt". Retrieved May 3, 2017.
  15. ^ "Instructions for Form 1099-CAP - Main Contents". Internal Revenue Service. Retrieved January 11, 2016.
  16. ^ "Form 1099-DIV". Investopedia. Retrieved January 11, 2016.
  17. ^ "Instructions for Form 1099-G - Main Contents". IRS. 2017. Retrieved May 3, 2017.
  18. ^ "Instructions for Form 1099-H - Main Contents". Internal Revenue Service. Retrieved January 11, 2016.
  19. ^ "Form 1099-INT". Investopedia. Retrieved January 11, 2016.
  20. ^ "Filing Tax Form 1099-INT: Interest Income". TurboTax. 2015. Retrieved January 11, 2016.
  21. ^ "Gig workers could end up losers in Covid relief bill". POLITICO. 5 March 2021. Retrieved 2021-03-12.
  22. ^ Wang, Jim (November 16, 2011). "What Are the Different 1099 Tax Forms?". Retrieved January 11, 2016.
  23. ^ "1099 LTC - IRS Form Reporting Long Term Care Insurance Benefit Payments Understanding IRS Form 1099 LTC". American Association for Long-Term Care Insurance. Retrieved January 11, 2016.
  24. ^ In tax years 1983-2019, this information was reported on Form 1099-MISC.
  25. ^ "What is IRS Form 1099-OID?". 1099FIRE. Retrieved January 11, 2016.
  26. ^ "Form 1099-PATR, Taxable Distributions Received From Cooperatives". Retrieved January 11, 2016.
  27. ^ "Instructions for Form 1099-Q - Main Contents". IRS. 2015. Retrieved May 3, 2017.
  28. ^ "Form 1099-R". Investopedia. Retrieved January 11, 2016.
  29. ^ "Instructions for Form 1099-S - Main Contents". Retrieved January 11, 2016.
  30. ^ "Instructions for Forms 1099-SA and 5498-SA - Main Contents". IRS. 2016. Retrieved May 3, 2017.
  31. ^ "How can I get a form SSA-1099/1042S, Social Security Benefit Statement?". Social Security Administration. Retrieved January 9, 2016.
  32. ^ "Form RRB 1099 Tax Statement General Information". U.S. Railroad Retirement Board. Retrieved January 11, 2016.
  33. ^ "Publication 575: Pension and Annuity Income, For use in preparing 2015 Returns" (PDF). Internal Revenue Service. Retrieved January 11, 2016.
  34. ^ "Internal Revenue Service". The Guymon Herald (Guymon, Oklahoma). February 17, 1918. p. 1.
  35. ^ "$578,304 Decrease in W.R.&E. Surplus: Strike, Higher Tax and Increase in Materials and Labor Cost Cut Net Income." The Washington Post. January 20, 1918. p. RE4. "A special blank for use of employers in reporting to collectors of Internal revenue annual salaries paid in 1917 in excess of $800 has been prepared by the bureau of internal revenue throughout the country. The blank is form 1099, and Washington business organizations can procure it by applying at the Treasury. Under the war revenue act of 1917 employers are no longer required to withhold the 2 per cent income tax from salaries, except in the case of non-resident aliens, but must advise the internal revenue collectors of all salaries paid which amount to $800 or more."
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