WHAT ARE 1099 FORMS?
Many people receive their income in the form of paycheck, and the only typical tax return form they file are 1040 and W-2 documents that are sent to the Internal Revenue Service (IRS). But, not all income can be reported through this 1040 form, many of them require other forms. A lot of these taxable incomes need to be reported through any of the types of 1099 forms. There are several types of 1099 forms, and the letter behind 1099 specifies that with what type you are dealing with.
To receive a 1099 form and then report it to Internal Revenue Service (IRS) is very common nowadays. Types of 1099 forms are used to report a variety of incomes that does not include wages, tips or salaries. For these three types, W2 forms are used.
Furthermore, 1099 form is used in many situations such as cases in which a mutual fund, investment or a company gives dividend payments to the investor or investors receiving interest payments from a bank or bond fund. Additionally, the person paying you would give you the 1099 form or else it will be your responsibility to report it to IRS.
WHAT ARE THE DIFFERENT TYPES OF 1099 FORMS?
Internal Revenue Service (IRS) uses these types of 1099 forms to distinguish your regular income with the ones that you do not receive from your regular job. It is most likely that you will receive a 1099 form when you do not receive a W-2 form.
Various 1099 forms are given below:
1099-A: You have to submit a 1099-A form if are a lender and have bought or abandoned any of your secured property.
1099-B: You have to report your income through the 1099-B form that you have exchanged through barter, any of the sales of securities or commodities as well as the future transactions.
1099-C: If you have cancelled any of the debt that you owed to a financial institution you have to report it through the 1099-C form.
1099-DIV: You have to report any of the distribution of dividends, capital gains or any distribution that is nontaxable through the 1099-DIV form.
1099-G: Payments of unemployment compensation, state and local tax funds, and payments of agriculture should be reported through the 1099-G form.
1099-INT: Report your interest income that is of $10 or more through 1099-INT.
1099 K: This is a new type of 1099 forms that is used to report card and third party network payments. To report payment transactions 1099-K form is required. Here, payment transaction includes the payment that is made through the credit card of through a network of third party payment such as e-bay, pay pal and etc.
1099-LTC: long-term care insurance contract or death benefits are reported under this type of 1099 forms.
1099-MSA: Your distribution from an account of medical savings has to be reported through this 1099-MSA form.
Form 1099-MSA is required for reporting distributions from a medical savings account or the Medicare plus Choice MSA.
1099-OID: You can issue any of your original issue discounts of $10 or more through this 1099-OID form.
1099-R: Any of the retirement distributions, plans about profit-sharing or any insurance contracts of $10 or more is to be reported to RIS through this 1099-R form.
1099-S: Real estate sales totaling $600 or more have to be reported to the IRS through 1099-S form.
WHY REPORTING THROUGH 1099 FORM MATTERS:
To sum up, this is important for you to know that this is essential to report your payments to IRS in order to complete the income tax return. This is important because it is one of the vital part of recording and verifying unique types of payment.