Are you new to filing taxes, and you may have been told to look out for 1099 Forms? Not sure what a 1099 is? A 1099 is a form that is used to list the various types of income you receive throughout the year other than salary. It’s important for every individual to report this outside income to the IRS.
We’ll let you know about the uses of 1099 Form, filing Federal 1099 MISC Form, revived 1099 NEC Form, reporting 1099 DIV Form, importance of 1099 INT Form, and when to file a 1099 K form.
What is the use of 1099 Form?
1099 Form records that a person or a business, not your employer, paid or gave you money. This Form is different than a W-2 Form, which you receive from your employer. If you receive a 1099 Form, that indicates you’re not technically not employed by the person. You may fall under this category when you work as a freelancer, or self-employed worker.
Form 1099 reports the total income you earned from freelancing client or contracting platform. You should receive some version of Form 1099 when you work as an independent contractor, freelancer, or investor in the mail by February 1st, 2021. Every individual person who receives 1099 Form must keep a record, because they will need it in order to file income taxes.
Filing 1099 MISC Form
1099 MISC Form is one among the most frequently issued 1099 Form. Business individuals file 1099 MISC Form to report the miscellaneous income. File a 1099 MISC Form to report several types of payments, including the following:
If you paid an individual as rent for office space, then you need to issue a 1099 MISC Form.
Payments made for the use of the property of an individual, from oil and mineral properties to copyrights and patents.
If you paid an individual as prizes or awards, damages, or juror’s compensation, then you need to file 1099 MISC.
Medical and healthcare payments
Payments made to physicians and other health providers for medical services are reported through 1099 MISC Form.
Payments to attorneys
If your business individual paid a law firm of $600 or more for services, then issue a 1099 MISC Form.
There are several other types of miscellaneous income the 1099 MISC Form is used to report. This includes substitute payments to brokers, fishing boat proceeds, crop insurance profits.
Revived 1099 NEC form
The IRS officially released the Form 1099 NEC in December 2019. The revamped Form substitutes 1099 MISC box 7. IRS revived back 1099 NEC in 2020 to enhance through compliance and prevent fraudulent reporting of income. Form 1099 NEC is a special form reintroduced in the 2020 tax year for the exclusive purpose of reporting non-employee compensation. Any payments are disclosable in Form 1099 NEC if:
Payments for services received in the course of business or trade.
The amount paid to the payee must exceed or be equal to $600 annually.
Payments to a person who is not an employee with the entity.
The payments may be made to an individual, partnership firm, or LLC.
Reporting 1099 DIV Form payments
Form 1099 DIV used to report dividends and other distribution payments to investors. Dividends reported on the Form include dividends paid, capital gain dividends, and exempt-interest dividends. Banks and other financial institutions report the below payments through 1099 DIV Form:
Dividends and other distributions paid on stock of $10 or more.
Liquid cash of $600 or more paid for money or property.
Withheld and paid foreign tax on dividends and other distributions on stock.
Federal income tax withheld on dividends under backup withholding rules.
IRS 1099 INT Form importance
Most types of income are taxable; you’re expected to report all your taxable income on your federal income tax return each year. That means money you earn from investments or financial accounts can also be taxable.
When you receive $10 or more of taxable interest, you should also get a 1099 INT from the entity that paid you the interest.
Sources of taxable interest include:
Dividends from a bank account, money market account, or certificate of deposit.
Interest from treasury bills, notes and bonds.
Certain interest from series, U.S. Saving bonds.
1099 INT Tax form helps you to accurately report all the income you may have to pay tax on.
When to file 1099 K Tax Form?
If you’re operation a small business of selling goods online, you can receive card payments and third-party transactions. Whatever the size of your business, you need to report all those transactions to the IRS. Form 1099 K can help you do that.
Form 1099 K is a Form the IRS requires PSE to use to report card payments and third-party network transactions. Third-party networks issue the Form when you receive $20,000 or more in gross payments and had 200 or more transactions.
Have got clear information about 1099 Forms? Then you’re now able to report the payments made in the prior year. Hurry up! The deadline to file your information returns with the payee are about to reach. We provide you service to file all the 1099 Forms.