What You Need to Know About 1099s

This page will hope to tell you everything that you may need to know about 1099s. These forms can be very complex and difficult to understand, but with the aid of this page, you should never struggle again.

 

Taxes are very difficult to manage, especially as a sole trader, which is why we have simplified everything you could ever need to know about 1099s right here for you. Other guides offer complex and hard to understand pages and explanations – but not this one. Here is everything you need to know about 1099 forms.

You Don’t Have to Do Them Yourself

1099 forms are terribly confusing, admittedly, but most things to do with tax are. Fortunately, you do not have to fill out 1099 forms yourself, and rather, you can have them handled for you by outsourcing agencies and external service providers. Many small entrepreneurs will have come to this website dreading having to fill their 1099 forms themselves – but may be pleased to know this not the case. You can, in fact, have an external bookkeeper handle all of that for you. If you are not mathematically minded and are worried about having to fill out your 1099 – then do not worry, for you can hire somebody to do it for you. What a relief, right?

Wait a Minute, What Is a 1099 Form?

If you’ve come here not knowing what a 1099 form is, then let’s get into it, shall we? A 1099 form is a required federal income tax information form that must be submitted by businesses and companies so that they can document specific financial transactions that they have conducted during the tax year. The forms, as with other tax forms, are filled with the U.S. IRS [Internal Revenue Service] – and may also have to be filed with other tax departments, but that is subject to the requirement and is not always mandatory. The 1099 form will also be copied and sent to individual taxpayers in order to aid them to assess their total income and calculate their taxes. The 1099 form reports all earnings that one makes other than their wages, their salary, and bonuses [some of which are not taxed], that are reported on the federal W-2 form.

 

 

 

A person who receives 1099 is expected to file it and hold onto it for their personal income tax return. It is always good to document and keep hold of any tax-related paperwork for the future, as you never know when it may be required.

 

Variants of the 1099 Form

There are over twenty-two different variants of the 1099 form – but the one most commonly seen and filed in the United States is the 1099-MISC. The 1099-MISC is a tax form given to freelancerS who are self-employed and independent contractors. Those who receive a 1099-MISC form are not considered to be the employee of anyone [other than themselves].

Here is a list of people who you could typically expect to receive a 1099-MISC form:

• Consultants;
• Writers;
• Copywriters;
• Actors;
• Musicians;
• Plumbers;
• Carpenters;
• Gardeners;
• Anyone else who is paid on a job-by-job basis.

Other 1099 Forms

There are also many other forms of 1099 forms outside of the 1099-MISC. Some of these are:

• Form 1099-B – Form 1099-B reports proceeds between brokers and barters;
• Form 1099-S – Form 1099-S reports rental income or real-estate profits and transactions:
• Form 1099-Q – Form 1099-Q documents payments from QEPs [Qualified Education Programs];
• Form SSA-1099 – Form SSA-1099 records ingoing Social Security payments;
• Form 1099-R – Form 1099-R records payments from profit-sharing plans, pensions, and retirement plans;
• Form 1099-DIV – Form 1099-DIV is used by banks and financial institutions to report investment income;
• Form 1099-INT – Form 1099-INT is used to report income from interest.

Submission Date

Ordinarily, as with most tax returns, the date for which they are required to be submitted is January 31st of each year. Penalties are issued to those who send incorrect returns, or those who do not remit their correct payee statements in a timely fashion, and of course, to those who offer fraudulent returns – of which many do [and many find themselves incarcerated or being arrested].

The U.S. Internal Revenue Service compares a payee’s tax returns with 1099s to establish any unreported or under-reported income on which tax may be required. Discrepancies between the two will often result in a tax audit and penalties – which we have just mentioned. It’s important to remember the submission date to avoid these penalties.

Now, with the help of this page, the 1099 form should be a lot easier to understand and a lot less confusing now. 1099s are a real nightmare, yes, but with this page, they do not have to be. Be sure to file your tax returns by the specified date and never past it – you could be subject to big fines!

SEE: Having Tax Avoidance Troubles?