There are a number of different forms associated with federal income tax preparation in the United States, each with its own specific purpose. One of these forms is the 1099-misc, which you are likely to receive in January if you are required to report certain types of income to the Internal Revenue Service.

Identification

A 1099-misc form is used to report types of income earned from sources other than employment or earned interest. The form also reports any health insurance premiums that were paid and any taxes that were withheld from the income reported on the form.

Types of Income

Income reported on a 1099-misc include royalties, commissions, rent and cash prizes. This form is also used to report income earned as an independent contractor rather than an actual employee of a company, and is commonly sent to freelancers and other individuals who are self-employed.

Function

The purpose of the information on a 1099-misc is to determine how much you owe in taxes for other income that you received during the course of the year. Items like health insurance payments or tax withholdings are subtracted from the amount that you owe.

Features

One copy of the 1099-misc form is sent to you, the person who did the work, while the other is sent to the Internal Revenue Service.

Considerations

To determine how much you owe in federal and state income taxes based upon the information on a 1099-misc, contact an accountant or tax preparer as the amount you must pay can vary based upon a number of different factors, such as your other income.

Source:

Internal Revenue Service: 2009 Form 1099-Misc