A 1099 Form is an informational document required to report income and interest earned that falls outside typical employment structures. If you have been employed for longer than one year, you are probably familiar with the W-2 form you receive at the end of the year from your employer that indicates your gross wages and taxes paid, but if you own an interest-earning account, do contract work or are self-employed, or have other income sources, you may be receiving many 1099s that will be required to complete your tax return.
There are actually about a dozen different types of 1099 forms that can be issued at the end of the year, but some are not very common, like the 1099-A, which is only used to report purchases of abandoned property. Several 1099 forms, however, are common enough that you will likely receive at least one in each tax year.
This most common 1099 form is used to report contractor income. If you are a contractor who does not receive a regular paycheck with taxes withheld, at the end of the year, anyone who has paid you more than $600 is required to provide you with a 1099 form detailing the gross amount of money paid to you. This form is also used for reporting money you earned from winning prizes, to report income for doctors and attorneys, and for rent and royalty payments.
The 1099-G form is where government payments like unemployment insurance and state and local tax refunds are reported. Qualified state tuition programs are also reported here.
The 1099-INT is used to report all interest earned. For any account in which you have earned more than $10 interest in a year, the financial institution is required to provide you with a 1099-INT. In most cases, you must report the interest as income on your form 1040.
This form is used to report distributions that are made from your retirement account and certain insurance distrubutions. They are required for distributions of more than $10.
Two less common but still important types of 1099 forms you may receive, depending on the circumstances, are related to insurance. The 1099-MSA reports payments received from a medical savings accounts. All amounts are required to be reported. The 1099-LTC is provided when you have a long term care insurance policy or are receiving accelerated death benefits. Whether or not you will owe taxes on these types of incomes will depend on the individual, but in all cases the information is required to be reported to the IRS.
The issuer of any 1099 is required to provide you with the form by January 31 so that you have enough time to file your taxes by the April 15 deadline. However, the information is not required to be reported to the IRS until usually February or March by the issuer, so if you receive a 1099 that has a discrepancy, you have time to have it corrected and reissued. Be sure if you are using a corrected form that you indicate that on your tax return when you are filing.