An IRS 1099 form is an assortment of different tax forms that individuals might receive for non-traditional work situations. For instance, if a person were to perform one or more side-jobs, then that person might receive a 1099 form that needs to be filed with their tax return. When a person works as a regular employee for a company, that company is responsible for deducting the appropriate taxes from every employee’s paycheck.
However, when a worker performs services for an individual or a company as a freelancer or contractor, then the person receives 100% of the pay. This doesn’t mean that the person isn’t responsible for paying taxes, because any earnings greater than $600 are taxable and must be reported. Failure to report any earned income greater than $600 in a single tax year can result in penalties, fines, and late payments. For earnings below $600, it is up to the payer whether a 1099 form will be provided since it’s not required.
Multiple IRS 1099 forms may be received by the same person if work that paid over $600 was performed for more than one individual or business. This will not cause a problem when a person who has received multiple IRS 1099 forms files their income taxes, but it will simply make completing the income tax return more time-consuming and possibly more complicated.
Who needs to get an IRS 1099 form?
Anyone who performs work that isn’t for a regular employer will receive a 1099 tax form if they are paid $600 or more. Even if a 1099 form isn’t provided for a worker, the earnings will still need to be claimed on a person’s income tax return. Taxes are typically not deducted from the pay of freelance or independent contractor work, so a 1099 ensures that the individual has the necessary information available when they file their taxes. Taxes will need to be paid on the income that was earned regardless. A 1099 ensures that the IRS is aware of the earnings, as businesses are required to report any payments that exceed $600.
Some people who will be required to receive IRS 1099 forms are:
- Freelance writers and other artists
- Individuals who have repaid money on federal student loans
- Individuals who have received gambling winnings
- Individuals who have received interest from investments
- Landlords who were paid rent from rental properties
- Among various other situations
For people who have earned more than $600 during a single tax year who fail to receive IRS 1099 forms, they can opt to contact the business and request one. However, there is no guarantee that the company will provide one, so the taxpayer must be sure to keep track of 100% of their earnings so they can be accurately reported.
Types of 1099 forms
When most people think of an IRS 1099 form, they think of simply one form. However, there are many different types of 1099 forms that individuals will receive, depending on the type of income that was received. Here is an overview of three very commonly-used IRS 1099 forms and why one might receive that particular form:
1099 – MISC – This form will be provided for individuals who earned more than $600 in a single tax year, which includes things like royalties from book or music sales, prizes (like winning the lottery), rental income, and more. For more information about what type of income will be included on the 1099-MISC form, you can refer to the IRS website.
1099 – NEC – This tax form will be provided for you if you have performed freelance or independent contractor work of any type in which a worker earned more than $600 in a single tax year.
1099- G – This tax form is necessary if you received a state or local refund from the prior tax year.
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For the past 20 years, Tab Service Company has been a leading source of 1099 services for all types of companies. Our clients stay compliant, reduce administrative costs, and know that the job is getting done correctly and on time. Our web-based 1099 e-filing and forms management system brings the power of securely managing the year-end process right to your desktop.
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