If you’re new to the whole employer-employee scene, one of the most important forms you will come across is the IRS 1099 Form. As it is your duty to pay your taxes diligently, learning more about this tax form will be of great help. Let this post help you to become familiar with this process.
IRS 1099 Form | What You Need To Know
What is an IRS 1099 Tax Form?
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Also known as the information returns, The IRS 1099 form is a sheet reflecting all the earnings you’ve received in a year. This is fulfilled by the payer or the employer and is submitted on or before January 31st. There is a need to submit one of these if you are paying or getting paid with a minimum of $600.
How Does the 1099 Process Work?
If you are hiring a freelancer, you’ll need them to fill a W-4 form, since it goes hand-in-hand with 1099. As the one who’s paying and submitting the form, you’ll send this to the IRS form, along with the W-4 and 1096, which is a more comprehensive form containing the breakdown of the services paid for.
When is IRS 1099 Form Needed?
Do you know whether you need to file a 1099? Get answers to frequently asked questions about 1099 forms in our latest blog post: https://t.co/qbnMbtdx9a #taxes #taxseason #business #contractors #IRS pic.twitter.com/oK96edspd2
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Form 1099 applies to every income you receive and is not limited to monthly salary or part-time jobs. The entity that takes care of your portfolio or bank account, is required to send the IRS a copy of your other earnings, too. Therefore, the dividends your money earn in the stock market, or even when you withdraw from your retirement account, is considered as taxable income.
Who Sends This Form?
This form is not limited to your employer or the entity that keeps tabs on your earnings. If you are running a business, you are required to submit this form to the IRS, for your employees. Basically, the one paying is the one responsible for sending a report to the IRS.
Different Types of 1099 Form
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There are six different types of the 1099 Form. Here’s how each applies:
- 1099-MISC – Used for freelance earnings. The earnings you receive on every job shall have a corresponding form.
- 1099-DIV – This one applies to the dividends of your stocks money. The one who reports this is the company you invested in since you appear to be one of their shareholders.
- 1099-INT – The bank holding your savings account is responsible for filling this one. Your savings will be taxable if the interest reaches the minimum taxable earnings.
- 1099-G – The federal, state, and local government, files this one for payments of taxable grants, state/local income tax refunds, offsets, and credits, agricultural payments, unemployment compensation, and reemployment trade adjustment assistance.
- 1099-R – You’ll receive this form when your total withdrawal for the whole year exceeds $600. This also applies to your pension and other profit-sharing plans.
- 1099-C – This form is a bit different from all the forms since it doesn’t reflect any of your earnings. Instead, the 1099-C is used when your creditor cancels a portion of your debt, and the debt cancellation may now be added to your taxable income.
Check out this helpful guide on the IRS 1099 form, courtesy of HowToWith GEO:
IRS Form 1099 is very easy to accomplish, and it won’t require a calculator to fill out specific portions. Just keep things organized and sorted out in a timely fashion, and you’re all set. Make sure to secure an extra copy, since it may come in handy, sooner or later.
Done with your IRS 1099 Form duties? Share your experience working on this in the comments below!