Do you receive income that isn’t reported on your W-2? If so, you may need to file an IRS 1099 form. This document reports various types of income, such as dividends, interest payments, and royalties. It is important to understand that not all 1099 forms are the same.
There are several different types of 1099s available, each for a different type of income. This blog post will discuss the importance of filing a 1099 form and provide a list of the most common 1099 forms.
What’s an IRS 1099 Form?
An IRS form is used to report income that isn’t reported on your W-2. This document is used for various incomes, such as dividends, interest payments, and royalties. The important thing to understand about these forms is that not all of them are the same. There are different types of IRS forms for different types of income.
List of Common Types of IRS Forms
Here is a list of some common types of IRS forms:
- W-2 – Used to report wages and salaries
- Form 1099-INT – Used to report interest income
- Form 1099-DIV – Used to report dividend income
- Form 1099-MISC – Used to report miscellaneous income
What’s a Form 1099-INT?
A Form 1099-INT is an IRS form used to report interest income. This type of income is often received from investments, such as bonds or savings accounts. The important thing to remember about this form is that it must be filed if the total interest earned exceeds $600 in a year.
What’s a Form 1099-DIV?
A Form 1099-DIV is an IRS form used to report dividend income. This type of income is often received from stocks or mutual funds. Like interest income, the important thing to remember about this form is that it must be filed if the total amount of dividends earned exceeds $600 in a year.
What’s a Form 1099-MISC?
A Form 1099-MISC is an IRS form used to report miscellaneous income. This type of income can come from various sources, such as rental property or freelance work. The important thing to remember about this form is that it must be filed if the total income earned exceeds $600 in a year.
Form W-12 VS Form 1099
The two forms, the W-2 and 1099, fulfill a similar purpose – to report income you made throughout the year on multiple sources. However, they are issued under distinct situations and need diverse methods for tax season preparation. Here, we will provide all the information you need on both forms to decide which one is best for your specific case.
The key distinction between the form w-12 and form 1099 lies within their content. A W-12 only reports employee wages, salaries, and tips, while a form 1099 can report a wider variety of income, such as:
- Interest and Ordinary dividends
- Retirement plan distributions
- Gains or losses from selling assets
- Unemployment compensation
- Prizes and awards
As you can see, the form w-12 is more limited in the types of income it reports. This is because an employer files the form w-12 to the IRS on behalf of their employee. In contrast, a Form 1099 is filed by any organization or person who pays an unincorporated independent contractor $600 or more in a tax year.
When Could You Expect A 1099 Form?
If you earn income from sources other than employment, you may need to file an IRS form. For example, if you are a freelancer or independent contractor, you will likely need to file a Form 10099-MISC. This form reports miscellaneous income such as royalties, commissions, and rents.
It’s important to note that not all forms of income are reported on Form 1099. For example, if you earn wages from an employer, this income will be reported on a W-2. If you earn interest from a savings account, Form 1099-INT will report this income.
It’s also important to understand that not all businesses are required to send out Form 10099s. For example, if you earn less than $600 in a year from a company, they are not required to send you a Form 10099-MISC. However, you are still required to report this income on your tax return.
Why Is It Important To Report All Income?
It is important to report all income, even if you don’t receive a form. The IRS can penalize you for not reporting income, even if you didn’t receive a form. So, if you earn any income that isn’t reported on your W-2, make sure to file the appropriate form.
Form 1099 Due Dates
If you’re an independent contractor or self-employed person, you should receive a Form 1099 by January 31st. This form reports your income from rents, royalties, partnerships, S corporations, estates, and trusts. You will then use this information when filing your tax return.
The deadline for businesses to send out 1099 processing forms to their contractors is January 31st. If you don’t receive your form by that date, you should reach out to the business and ask for a copy.
Missing The 1099 Deadline
The IRS has several penalties if you miss the deadlines for issuing 1099-MISC forms. If you deliberately avoid filing, you face a minimum fine of $530 per statement, with no maximum. Accidental late filing penalties include:
- If you file within 30 days past the deadline, you will be charged $50.
- If you’re more than 30 days late, but before August 1st, you will be charged $100.
- If you file on or after August 1st, you will be charged $260 in late fees.
The penalty is calculated based on the date you file the correct information return. You can seek an extension to file IRS Form 8809 if you can’t do so on time. However, this does not extend the deadline for sending a copy of your 1099 to independent contractors until January 31st.
1099 Form For Independent Contractors
As an independent contractor, you may receive a Form W-12 from the company you contract with if you earn more than $600. The form is used to report your annual earnings to the IRS. The company you contract with will also provide you with a year-end statement of what they paid you, which can be used come tax season.
As an independent contractor, you must track all the money you’ve earned throughout the year to avoid getting behind on your taxes. And, if you do receive a Form W-12 from a company, make sure to keep it in a safe place so that you can reference it come tax season.
1099 Form For Small Business Owners
As a small business owner, it is your responsibility to send out a 1099 form if you’ve used the services of an independent contractor and paid them $600 or more in a year. This includes contractors such as plumbers, electricians, and even website designers. You will also need to provide a year-end statement to the contractor detailing what you paid them so that they can correctly file their taxes.
If you don’t send out the appropriate forms come tax season, you may be subject to penalties from the IRS. So it’s important to make sure that you’re staying on top of your paperwork and taking care of everything promptly. Getting help from tax services is ideal to ensure you don’t miss anything.
How To File A 1099 Form
Before you can finish and submit a 1099 form, you’ll need the following information for each independent contractor:
- Social Security Number or taxpayer identification number (TIN)
- Address – if the contractor is an individual, use their home address. If the contractor is a business, get the business address.
- Bank account and routing number (if you paid the contractor by direct deposit)
- Amounts paid during the year – You’ll need to know how much money you paid the independent contractor during the tax year to fill out Copy B of the Form.
Create Copy A and Copy B
When filing 1099, you must know there are two copies you need to fill out and send out: Copy A and Copy B.
- Copy A goes to the Independent Contractor.
- Copy B goes to the IRS.
You will need to file a separate form for each contractor you have paid $600 or more during the tax year. You can find these forms on the IRS website or order them from the IRS by calling them directly.
You do not have to submit a Form 1099, Copy B to the IRS if you are an independent contractor and get one from a customer. You report the earnings shown in Copy B on your income tax return.
What Should You Do If You Don’t Receive An Expected 1099 Form?
If you’re an independent contractor and don’t receive a 1099 form from a customer you expected to get one from, don’t panic. You can still report the income on your tax return without receiving a Form.
The customer may have misplaced your information or may not have sent one out because the total amount paid to you was less than $600 for the year. If this is the case, and you’re positive that you should have received a Form 1099, you can send them a reminder.
Get Ready To File Your Taxes With Nesso
Staying on top of all your tax deadlines can be confusing and difficult. This is especially true for understanding what different IRS forms are used for. At Nesso Tax, we can help you figure out all this information in an easy-to-understand way.
Our main goal is to ensure our clients’ needs are handled, so they don’t have to worry about the confusing part of taxes. Our Nesso Group experts can help with anything you need, including IRS form filing. Reach out to learn more about how we can help you out.