ANSWERS: 1
  • The 1099 form is called an informational return. It is used to report earnings and transactions to the IRS that fall outside of the normal wages and salary reporting.

    Function

    A 1099 form is issued by the person or company that paid you. It lists the amount of money you received and your tax information, to include as part of your tax return for the year.

    Types

    The 1099 Misc is used to report royalties and income received as an independent contractor. Other 1099 forms cover income from unemployment (1099-G), selling stock, (1099-B), tax refunds (1099-G), pension payments (1099-R), real estate (1099-S), dividends and stock issues (1099-DIV, -OID), foreclosure (1099-A) and even death benefits (1099-LTC).

    1099 MISC

    Most commonly used for independent contractors, the 1099-MISC is also used to report insurances payments and reimbursement, fees received, prizes, lottery winnings and court settlements.

    Employment

    Excess payments made to you by your employer that are not part of your salary or wages are reported on the W-2, and not the 1099. These payments include winnings from company contests, allowances for conferences and mileage as well as any reimbursements received from the company.

    Filing

    The 1099 tax return must be filed with the regular tax return. It also has the same due date as the normal return, April 15. Failure to file can result in penalties and/or jail time.

    Source:

    IRS: A Guide to Information Returns

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