What Is 1099 Form and Its Different Varieties
Any person who is earning money in business or through employment must file their tax. Normally, a tax return refers to the documentation filed by the taxpayers with a tax authority on reporting the expenses, income, and associated financial information. During the tax filing process, the taxpayers will calculate their refunds from the over-paid taxes, tax payment schedule, and tax liability. The procedure differs from each country and in most countries, they require the payers to file it annually. In the United States, the taxpayers will file their tax returns with IRS, which is Internal Revenue Service. They are different IRS Forms available for filing and IRS Form 1099 is especially for the regular salaried people to file tax on the income they receive other than their salary all over the entire financial year, it simply means the outside income. This form has to be filed by January 31st of every year.
What Needs to Be Filed?
To avoid the auditing issue, the taxpayer has to report all their income sources which include rewards they receive from freelancing works, investment dividend, and interest earned from a bank account or deposits. The 1099 forms issuers should send one tax return copy to IRS and taxpayers and the payment recipients. They can prefer sending the forms in early February either as a print copy or email.
What are the 1099 Forms types?
There are a few different 1099 tax forms available and they are as below.
- 1099-A: If you get any mortgage cancellation from the mortgage lender, or if you are involved in selling your home, you may receive Form 1099-A.
- 1099-B: Form 1099-B reports income you receive from selling a variety of securities and bartering conducted through online bartering exchanges.
- 1099-C: You’re not completely out of the woods if you convinced a lender or credit card company to pay off your debt for a lower amount than you be in debt. The amount forgiven by the lender is almost certainly taxable income and it covers under the 1099-C form.
- 1099-INT: If a taxpayer earned over $10 in interest during the tax year, they will receive a 1099-INT. Banks, investment firms, and brokerage houses typically receive this form.
- 1099-G: Those who got money from the state, local, or federal government are handed a 1099-G form.
- 1099-R: If a taxpayer receives a dividend or pension payout, retirement plan, or holds an IRA account (Individual retirement account), a 1099-R is sent (IRA). Certain life insurance and annuities contracts may also receive this form.
So, by considering all the aspects, you need to report all your outside income and pay your tax.