Form 1099 is a document of ‘tax return’. It is a kind of Tax Form you get in your mail box if you have received any form of income, from any source at any given time of the year. You have to mention about your earning through a report on your tax return.
It is quite similar to W-2. W-2 carries information regarding the following sources of incomes:-
Form 1099 comes in varied varieties to report income generated through the numerous sources by a self-employed citizen. Each form has different aspect to mention. To understand the process and ways to mention your income source, to pay the tax on/for, a visit to the page www.1099-etc.com/software/ is recommended.
Why is 1099 needed to be maintained?
You must keep the mentioned -1099, along with your other records of the tax that you pay every year. Merge it with the existing ones. Also keep in mind that if you do not receive this form, you are still liable to bring the information into notice of the Internal Revenue Service (IRS).
You are expected to behave as a responsible citizen and send the notification. Usually the forms are sent to the respective income receivers by January 31st. Just in case if it is not received, which is quite rare, make a call to the concerned official and request for it. If you do not receive the right 1099, a call can be made to the authorities as it is different for different sources of income. If mistake persists, notify the authorities again till you get what you need.
What are the varied forms of 1099?
Since it is different for different purposes, each taxpayer may need a different form. To mention, they are listed below
- 1099 INT- Int stands for interest and it is used if you receive income interest.
- 1099- C – In case if you have taken loan and you get debt forgiveness, this is also considered as income.
- 1099-S – The income involved in the real estate transaction needs reporting.
- 1099-A -if you have acquired or abandoned a secured property, you get this.
- 1099-C -in case there is cancellation of amount due to be paid.
- 1099 -MISC – This is received if the source of incomes are miscellaneous
- 1099- G – If a payment is received through the government
- 1099-R – If you are receiving pension/annuities/profit sharing plans/etc. ask for this.
What is double reporting?
Remember, some forms of reporting are done by either the banks or merchants, but the same mentioning is done by the customers too. This double reporting may cause confusion and may be of no benefit to either party.
It’s good to be responsible but solely depending on the 1099 series is not right. Always carry something as backup plan because there is high degree of double entry. Maintain a bank account to keep a track of your income vs. expenses separately.