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Form 1099 is one of several
IRS tax forms Internal Revenue Service (IRS) tax forms are forms used for taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service of the United States. They are used to report income, calculate taxes to be paid to ...
(see the variants section) used in the United States to prepare and file an ''information return'' to report various types of income other than wages, salaries, and tips (for which Form W-2 is used instead). The term ''information return'' is used in contrast to the term ''tax return'' although the latter term is sometimes used colloquially to describe both kinds of returns. The form is used to report payments to
independent contractors Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other ...
, rental property income, income from interest and dividends, sales proceeds, and other miscellaneous income. Blank 1099 forms and the related instructions can be downloaded from the IRS website.


Significance for payee's tax return

Payees use the information provided on the 1099 forms to help them complete their own
tax returns A tax return is the completion of documentation that calculates an entity or individual's income earned and the amount of taxes to be paid to the government or government organizations or, potentially, back to the taxpayer. Taxation is one of ...
. In order to save paper, payers can give payees one single Combined Form 1099 that lists all of their 1099 transactions for the entire year. Taxpayers are usually not required to attach Form 1099s to their own Federal income tax returns unless the Form 1099 includes a report for Federal income tax withheld by the payer from the related payments. The issuance or non-issuance of a Form 1099 in a particular case is not determinative of the tax treatment required of the payee. Each payee-taxpayer is legally responsible for reporting the correct amount of total income on his or her own Federal income tax return regardless of whether a Form 1099 was filed. For a variety of reasons some Form 1099 reports may include amounts that are not actually taxable to the payee. A typical example is Form 1099-S for reporting proceeds (not gain) from real estate transactions. The Form 1099-S preparer will report the sales proceeds without regard to the amount of the taxpayer's "basis" in the real estate sold. (Basis is usually the amount of cost incurred by the taxpayer when he or she acquired the property, perhaps years before the sale.) The taxpayer's basis amount is deducted by the taxpayer (on his or her own tax return) from the proceeds amount to determine the gain (if any) on the sale. In any case, the payee-taxpayer remains responsible for filing an accurate Federal income tax return.


Filing requirements

Each payer must complete a Form 1099 for each covered transaction. Three or four copies are made: one for the payer, one for the payee, one for the IRS, and one for the State Tax Department, if required. Payers who file 250 or more Form 1099 reports must file all of them electronically with the IRS. If the fewer than 250 requirement is met, and paper copies are filed, the IRS also requires the payer to submit a copy of
Form 1096 Form 1096 (officially the "Annual Summary and Transmittal of U.S. Information Returns") is an Internal Revenue Service (IRS) tax form used in the United States used to summarize information returns being sent to the IRS. Information returns are sen ...
, which is a summary of information forms being sent to the IRS. However, 1096 is not required if 1099 form filed electronically. The returns must be filed with the IRS and sent to payees by the end of January immediately following the year for which the income items or other proceeds are paid. The law provides various dollar amounts under which no Form 1099 reporting requirement is imposed. For some variants of Form 1099, for example, no filing is required for payees who receive less than $600 from the payer during the applicable year. For
Form 1099-MISC In the United States, Form 1099-MISC is a variant of Form 1099 used to report miscellaneous income. One notable use of Form 1099-MISC was to report amounts paid by a business (including nonprofits) to a non-corporate US resident independent contrac ...
in particular, businesses are required to submit a Form 1099 for every contractor paid more than $600 for services during a year. This requirement usually does not apply to corporations receiving payments. See the table in the variants section for specific minimum amounts for each form. The form is used to report income, proceeds, etc., only on a
calendar year Generally speaking, a calendar year begins on the New Year's Day of the given calendar system and ends on the day before the following New Year's Day, and thus consists of a whole number of days. A year can also be measured by starting on any o ...
(January 1 through December 31) basis, regardless of the fiscal year used by the payer or payee for other Federal tax purposes.


Variants

, several versions of Form 1099 are used, depending on the nature of the income transaction. One notable use of Form 1099 is to report amounts paid by a business (including nonprofits) to a non-corporate US resident
independent contractor Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...
for services (in IRS terminology, such payments are ''nonemployee compensation''). The ubiquity of the form has also led to use of the phrase "1099 workers" or "the 1099 economy" to refer to the independent contractors themselves. In 2011 the requirement was extended by the
Small Business Jobs Act of 2010 The Small Business Jobs Act of 2010 () is a federal law passed by the 111th United States Congress and signed into law by President Barack Obama on September 27, 2010. The law authorizes the creation of the Small Business Lending Fund Program admi ...
to payments made by persons who receive income from rental property. Form 1099 is also used to report interest (1099-INT), dividends (1099-DIV), sales proceeds (1099-B) and some kinds of miscellaneous income (1099-MISC). Blank 1099 forms and the related instructions can be downloaded from the IRS website. The following table provides information for each variant. Note that for those who have electronic filing of Form 1099 set up, the due date for the IRS is March 31 rather than the last day of February.


History

The
War Revenue Act of 1917 The United States War Revenue Act of 1917 greatly increased federal income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax g ...
required every entity to report certain payments made to another entity. Payments subject to reporting included payments of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable gains, profits, and income. Payments to an entity were required to be reported if the payments totaled at least $800 during the year. The payor was required to report the name and address of the payee and the total amount of payments on Form 1099 and sent to the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
by March 1 of the year following the payments. The payor was required to include Form 1096, a letter of transmittal and affidavit certifying the accuracy of each Form 1099.Internal Revenue Service
. ''The Guymon Herald'' (Guymon, Oklahoma). February 17, 1918. p. 1."$578,304 Decrease in W.R.&E. Surplus: Strike, Higher Tax and Increase in Materials and Labor Cost Cut Net Income." ''The Washington Post''. January 20, 1918. p. RE4. "''A special blank for use of employers in reporting to collectors of Internal revenue annual salaries paid in 1917 in excess of $800 has been prepared by the bureau of internal revenue throughout the country. The blank is form 1099, and Washington business organizations can procure it by applying at the Treasury. Under the
war revenue act of 1917 The United States War Revenue Act of 1917 greatly increased federal income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax g ...
employers are no longer required to withhold the 2 per cent income tax from salaries, except in the case of non-resident aliens, but must advise the internal revenue collectors of all salaries paid which amount to $800 or more.''"


See also

*
Form 1040 Form 1040 (officially, the "U.S. Individual Income Tax Return") is an IRS tax form used for personal federal income tax returns filed by United States residents. The form calculates the total taxable income of the taxpayer and determines how much ...
*
Taxation in the United States The United States, United States of America has separate Federal government of the United States, federal, U.S. state, state, and Local government in the United States, local governments with taxes imposed at each of these levels. Taxes are lev ...


External links


IRS instructions
for form 1099-MISC, including a guide to what payments must be reported


References

{{North America in topic, Taxation in
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