Are your 1099 Forms prepared for the year?
Also referred to as “information returns”, the 1099 form is a series of documents issued by the IRS. But what are they used for? And who needs to file? If you don’t know these answers, we got you covered. Continue reading below for a helpful guide on everything there is to know about 1099 forms.
What Are They?
The 1099 form is essentially a collection of tax documents. More specifically, it aims to document any type of payment that was made by an individual or business throughout a given year. But what makes these forms different is who made the payment. That’s because 1099 forms are usually used for payments made by someone that is not the main employer. For example, freelancer workers or contractors.
How is it Filled Out?
It is the payer who will need to fill out the form with all the necessary details. The payer will also be required to send copies to the IRS and to the individual they paid. The payers are also the ones responsible for distributing the documents to any necessary tax authorities that request it. Note that in these documents, they will also need to highlight every payment that was made throughout the given tax year for an individual.
How Often?
Nearly all 1099 forms are required to be provided yearly (and by January 31st), but some may have until February 15th. These dates vary based on the type of 1099 forms that is required. So, it is best to check with a financial professional about your specific circumstance.
Someone like us at AP Accounting & Tax Services would be able to review your accounts for the year to determine where and who should receive a 1099 form. We can also ensure that all of your payments throughout the year have been documented, so nothing gets overlooked.
Finally, note that although 1099 forms are due early in the year, individuals still won’t need to file their own tax returns until the actual tax filing deadline.
What Form to Use?
1099 forms wouldn’t need to be filled out if the payments were less than $600 for the given tax year. This means that if the person received $600 or more, it will be required to fill out. If the $600 (or more) that was earned came from a person or business which is not the person’s typical employer the exact form that should be used is Form 1099-NEC. This form is also typically used by business owners who employed a freelancer or independent contractor during the year to help with their business or industry needs.
If the $600 (or more) that was earned came from rental income or royalty payments then the form that should be used is the 1099-MISC.
Finally, if the earnings came from a state or local tax refund during the previous year then Form 1099-G will need to be issued.
It is also good to note that although the threshold for a required 1099 form is $600 of earnings, a payer may still choose to fill one out if the earnings are less. However, this choice is up to them.
Examples
1099 forms can seem vague, but there are a number of reasons why someone might need to fill one out. Some of the more common reasons why 1099 forms are issued have to deal with things like freelance work, contract work, rental income, gambling winnings, or even tax refunds that were received by the state.
If you’re still confused if you need to issue a 1099 form, or are struggling to keep track of all your payments, consider getting some professional help by speaking with us at 407-328-5001.
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