Finance

Know about the different types of the 1099 form

The Internal Revenue Service (IRS) classifies the 1099 form as a series of documents that can be referred to as information returns. Reporting all the income earned from various sources by every taxpayer in the country is mandatory, and a taxpayer can do this by filling the 1099 tax form which can also be availed under the IRS Free File.

The various types of income could comprise the following:

Independent contractor income: When you work for an employer and earn wages, the W2 form is used to report your annual earnings by your employer. However, the Form 1099-MISC is used if you are a contractor or a self-employed individual and if you receive payments over $600 in the span of a tax year.

For interests and dividends: For returns on stocks, shares, mutual funds, and all other distributions or interest payments you receive throughout the financial year, the Form 1099-DIV or Form 1099-INT is provided to the taxpayer by their respective banks.

Income from the government: The Form 1099-G is used by the Federal and state government agencies to report all the income that it pays out to taxpayers such as unemployment compensation or income tax refunds.

For retirees: The Form 1099-R is used to report all the distributions received from pension plans and all withdrawals made from the IRA account.

The 1099-C, however, is used by all those who benefit from the cancellation of outstanding debt by a creditor or a credit card company when your outstanding dues are waived by them. In such cases, the amount that is waived is treated as income and is taxed for.

The IRS website provides all the required information in a detailed format to those looking for more information and on how you can fill the 1099 forms for free. You could fill most of these forms online, do an e-signature, and fax or email it to recipients and even share it with others who need to be in the loop. Alternately, you could also complete the form yourself. The only thing that needs not be ignored, however, is that the details must be completely legible and neatly filled in to avoid processing errors. It is important that you check your work thoroughly and before you start filling the 1099 form, ensure all relevant information on your contractors are readily available. After getting the forms and filling out the necessary information, send the forms by mail to the IRS. However, before sending it, keep a record of the forms you send in your tax files for future reference purposes.

You can check for more details on how you can get the 1099 form for free or how to avail the IRS Free File from their official website.

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