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Business transactions often set up a taxable event, and the IRS requires that you notify it of these transactions in certain cases using an informational tax return. Form 1099, in all of its variations, is one of the more common of these forms. Many versions of Form 1099 exist and are distinguished from each other by a suffix added to the 1099 designation, such as Form 1099-INT. Each transaction has different minimum amounts that must be reported.
Informational forms must be filed by individuals or businesses that conduct certain transactions. Form 1099 may be used to report income to individuals, who must then report it as taxable income on their income tax return.
One copy of the appropriate Form 1099 must be given to the affected taxpayer and one copy sent to the IRS. The IRS will match this form with the individual taxpayer's tax return, to be certain the taxpayer is claiming the income correctly. If you have more than 250 Form 1099s to file, you must file them electronically with the IRS.
Form 1099-B is used to report certain securities transactions. These include futures transactions, barter exchange and commodities. These transactions must be reported regardless of the amount.
Report a cancellation of debt using form 1099-C. This is used by a lender that is forgiving all or a portion of a borrower's indebtedness, and it reports the canceled debt as income to the borrower. You must file this form if you cancel more than $600 in debt to any one borrower.
Dividends and capital gains distributions on stocks and equities are reported using form 1099-DIV. Liquidation distributions are also reported with this form, if the distribution is more than $600. Dividends and capital gains must be reported over $10.
Government payments are reported on Form 1099-G. State and local governments file this form to report tax refunds, taxable grants and unemployment compensation of any amount over $10.
Any bank, financial institution or other entity, including the U.S. government, that pays interest of more than $10 in a year must file a Form 1099-INT. This form also includes any penalties assessed for early withdrawal, which may be deductible from taxable income.
Use this form to report various types of miscellaneous income, including sales of over $5,000 in consumer goods for resale. Rent or royalty payments, as well as prizes and rewards are reported on Form 1099-MISC. This is also the form that companies use to report payments to people performing work as independent contractors. Some other less-common forms of income are reported on Form 1099-MISC as well.
Form 1099-R reports distributions from retirement or profit-sharing plans, as well as any IRA distributions. IRA recharacterizations, or reversing an IRA conversion, are also reported with Form 1099-R. Any qualifying amount over $10 must be reported on Form 1099-R.
Real estate sales proceeds must be reported on Form 1099-S. Any transaction amount over $600 means you will need to file a Form 1099-S.
Distributions from medical savings accounts or health care savings accounts are reported on Form 1099-SA. This includes distributions from Archer MSA accounts. This form must be filed regardless of the amount of the distribution.
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