1099 Requirements for the Fiscal Year

1099 Requirements for the Fiscal Year
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The Internal Revenue Service uses 1009 forms to keep track of a variety of monetary transactions. There are 17 different 1099 forms, but the most commonly used one is 1099-MISC, on which businesses report payments made to individuals for services rendered during the year. Taxpayers who receive 1099 forms in the mail must report the payments to the IRS.

Form 1099-MISC

If your business paid $600 or more to an individual for services, rent, prizes and rewards, or medical and health-care payments, or you paid more than $10 in royalties, you must file form 1099-MISC with your income tax return. This form is also used to document attorney's fees in excess of $600. It is not used to document rent paid to a real estate agent, nor is it used to report wages paid to employees, which are reported instead on form W-2. The 1099-MISC form is a general-purpose form that covers a variety of transactions, including purchases of fish from a fishing vessel.

Other 1099 Forms

Whenever a bank or other type of lending institution cancels part of a debt balance totaling more than $500, the lender must file form 1099-C with its tax return. Financial institutions paying distributions or dividends in excess of $10 must use form 1099-DIV, and those paying more than $10 in interest to a single individual must use form 1099-INT. Beginning in 2010, a payment-settlement entity making a payment to a participating payee must report the payment on form 1099-K. This form covers merchant card payments of all amounts and third-party network payments totaling more than $20,000 for the year.

Filing 1099 Forms

The person making the payments must file the appropriate 1099 form with the IRS and send a copy to the recipient of the payment. Although it changes from year to year, the date for filing the forms with the IRS in the 2011 tax year is Feb. 28 and the date for sending a copy to the payee is Jan. 31. A taxpayer who receives a 1099 form does not have to include it with his tax return, since a copy is already on file with the IRS, but she must include the information on it in her tax return.

Late Filing

Because 1099 forms contain important information that affect the amount of tax you owe, your tax return isn't complete unless you include the information from all of them in your return. Some 1099s, such as one documenting canceled debt, may mean you have to pay taxes you didn't know about. If you file taxes early and subsequently receive a 1099 that was held up in the mail, you can avoid paying a penalty for any extra taxes you owe because of it by filing an amended return before April 15. Penalties may apply if you file after that date.