Receiving a 1099
Have you received a 1099 and are unsure what is next?
WHAT: a 1099 is a tax document sent by an organization that paid you during the tax year. It is like a W-2 for a person that is not an employee.
WHY: a 1099 is often given when you earned income as an independent contractor. OR income in the form of dividends, interest, prizes, gambling, canceled debt, or rent.
If you don’t get a 1099 do you still have income?
Yes, the IRS expects you to declare your income whether it was reported to you on a 1099 or not!
What if I don’t report amounts on a 1099 sent to me?
It is almost a certainty that the IRS will send you a letter demanding taxes on the unreported income.
TYPES:
- 1099-B: income from brokerage transactions and barter exchanges.
- 1099-C: > $600 of debt canceled. Creditor typically files form with the IRS and you will receive a copy.
- 1099-DIV: used to denote income received through dividends and other stock of $10 or more.
- 1099-INT: received if you earned taxable interest income of $10 or more from a bank, credit union, brokerage, or another financial source.
- 1099-MISC: is issued when you receive at least $600 in rent, prizes, or worked/earned money from other resources.
- 1099-R: this includes distributions from pensions, annuities, profit-sharing plans, life insurance contracts, and other retirement accounts.
What is my next step?
Be sure to hand over all 1099s received and tax documentation to your tax preparer so they can have all the necessary information to process your return.