The IRS has announced different types of 1099 Forms to help the taxpayers report their income with the IRS. The purpose of all these Forms is the same and they are used to report their income information with the Internal Revenue Service. These Forms allow the taxpayers to report information pertaining to their non-contractual job income, interests from the banks, dividends from the investments, etc. Issuers of the 1099 Forms should send one copy to the IRS and another copy to the taxpayers. IRS accepts Forms that are mailed and are filed electronically as well.
Purpose of the 1099 Forms
The purpose of all of the 1099 Forms is to help the taxpayers in the US report all their income so that the IRS can collect appropriate tax from them. Form 1099 is considered as an information return Form by the IRS and it compares the income reported in these Forms with Form 1040. Individual taxpayers are responsible for actually completing any of the 1099 Forms, except in certain circumstances. Generally, financial institutions and employers are required to file 1099 Forms. Taxpayers will receive all copies of 1099 Forms that are applicable to them either electronically or by mail by February. The Payers of 1099 Forms are required to file 1099 Forms by 31st January.
The Most Common 1099 Forms
There are a number of versions of the 1099 Forms and most people will get at least a few of them at different points in their lives. The most common 1099 Forms are as follows.
- Form 1099 DIV – This Form is used for reporting the dividends and the distribution and is used by those who own a stock or a mutual fund that pays dividends.
- Form 1099 INT – This Form is used to report interest income. Taxpayers will receive this Form if they have savings, checking, or another bank account that earns them an interest.
- Form 1099- MISC – You will report Miscellaneous income in this IRS Form. If you have worked as an independent contractor with someone, you will receive this Form. Independent contractors who have different clients should receive 1099- MISC from each of the clients who paid $600 or more.
- Form 1099 R – You will report payments with your distributions and pensions, annuities, retirement benefits, IRAs, insurance contracts, etc in this IRS Form. You will receive Form 1099-R if you have received $10 or more from your IRA and other sources of retirement income.
- Form 1099- NEC – This Form is for reporting payments of non-employee compensation. From the year 2020, 1099-NEC is the primary form to report employment income that has been earned outside the W-2 wages. Form 1099- NEC is a common tax Form for freelancers, self-employed workers, independent contractors, and others who have gained income from a company, without being its regular employee.
- Form 1099- K– This Form is meant for reporting merchant card and third-party network payments. Generally, businesses that receive money through debit and credit card payments will receive this Form. Banks or payment processes will send this Form to businesses by January 31st.