Called information returns, the series of 1099 forms are designed for reporting a variety of transactions to the Internal Revenue Service. If a business pays more than $600 annually to a taxpayer who is working as an independent contractor, the business must report that information to the IRS on a 1099 form. The 1099 form is also used to report such transactions as interest payments, annuities, dividends and retirement pensions, among others.
Purposes of the 1099
The purpose of the 1099 is to report to the IRS tax information used in the calculation of personal income tax. Rents and commissions, non-employee services, royalties and income payments are some of the types of items reported on a 1099 form. For instance, if you won a cash prize in a lottery, the 1099-MISC form is used to report the prize payment to the IRS, with a copy of the form sent to you. Use the copy of the form when calculating your New Jersey state income tax for the year.
New Jersey State Income Tax Requirements
New Jersey taxpayers are required to include 1099 forms when filing their annual state income taxes This includes all 1099-R and 1099-Misc forms that indicate New Jersey withholdings. Since these forms indicate any additional income that has been received, they must be included when filing the New Jersey income tax return.
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All businesses required to report information using the 1099 form must provide this information to the IRS and the taxpayer no later than January 31 of each year with an extension to February 15 for some. For the 2012 year, the IRS requires that copies of the 1099s be filed with the IRS no later than February 28, 2012. Companies reporting more than 250 1099s must file electronically.
Companies making payments to individuals who require backup withholding must include this information on the 1099s sent to them. When taxpayer identification numbers are missing or incorrect, the IRS requires backup withholding. Payments that may require backup withholding listed on the 1099 include dividends, interest, royalties and non-employee compensation, among others.
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