The IRS has developed a series of forms called 1099's, also known as information returns, to track and reconcile various types of income received by taxpayers. Whenever an entity pays money that is considered taxable income to the recipient, the IRS requires the entity to file a 1099 form with the payment amount and receiving taxpayer’s information. The 1099's aid the entities in documenting relevant financial transactions they’ve conducted during the previous tax year. The forms also help the IRS verify income paid out to taxpayers, while also identifying income that tax filers may not realize they needed to report, or forgot to report, on their tax returns. Some common 1099 form variants include 1099-Misc, 1099-DIV, 1099-INT and 1099-C.
Tax Form: 1099-MISC
1099-MISC is the most common 1099 form, provided to independent contractors to report their earnings from a particular company. Each company provides a separate 1099 to the contractor and reports the same information to the IRS. The contractor is responsible for totaling up the earnings from various 1099-MISC forms, as well as paying self-employment and other income tax obligations. Form 1099-MISC is also used to report prize awards. Form 1099-MISC is generally filed for earnings of $600 or more. However, there are exceptions.
Tax Form: 1099-DIV
Form 1099-DIV is a report of dividend and other investment income paid. In addition to ordinary dividends, Form 1099 includes non-taxable distributions, qualified dividends and federal gains. Any federal or foreign tax paid is also reported on form 1099-DIV. Investors must have received or reinvested at least $10 to receive a form 1099-DIV.
Tax Form: 1099-INT
Form 1099-INT reports all interest income from a particular source for the tax year. Like form 1099-DIV, investors must have received at least $10 to receive a form 1099-INT. However, income that is owed but has not yet been paid is not reported on a form 1099-INT.
Tax Form: 1099-C
Form 1099-C is filed with the IRS and forwarded to an individual taxpayer whenever a creditor cancels or writes off a debt in excess of $600. In such cases, the canceled debt is counted as income, on which the recipient must pay taxes. The creditor may be a private corporation or a governmental agency, including the federal government.
Other 1099 Tax Forms
Another common 1099 form is the 1099-G, which lists governmental payments such as state tax refunds and unemployment benefits. The 1099-R, which includes payments from varied sources as pensions, retirement and profit sharing plans, annuities, IRAs and insurance contracts, is also common. Entities also file less common 1099 forms such as the 1099-LTC and 1099-B, for income received from accelerated death benefits on an insurance policy and barter transaction income, respectively.
The IRS uses several other types of 1099 forms for information reporting, including:
- 1099-A, Acquisition or Abandonment of Secured Property
- 1099-CAP, Changes in Corporate Control and Capital Structure
- 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments
- 1099-K, Merchant Card and Third Party Network Payments
- 1099-OID, Original Issue Discount
- 1099-PATR, Taxable Distributions Received From Cooperatives
- 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530)
- 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
In each instance, the 1099 form is provided to the taxpayer and a duplicate is filed with the IRS.
Taxpayers should investigate the regulations for reporting and paying any applicable taxes on income reported on a 1099 form. Instructions for the various 1099 forms are available for download from the IRS website.