1099
Form 1099 is a form promulgated by the Internal Revenue Service (IRS) and is used in the United States income tax system to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Social Security Administration Form W-2 is used instead). The term information return is used in contrast to the term tax return although the latter term is sometimes used colloquially to describe both kinds of returns.
Each payer must complete a 1099 for each covered transaction. Three copies are made: one for the payer, one for the payee, and one for the IRS.
IRS instructions for form 1099, including a guide to what payments must be reported.
Examples of report amounts paid to independent contractors (in IRS terminology, such payments are nonemployee compensation). The ubiquity of the form has also led to use of the phrase "1099" to refer to contractors themselves. U.S. tax law requires businesses to submit a Form 1099 for every contractor paid at least $600 for services during a year. This requirement usually does not apply to corporations receiving payments.
Many businesses and organizations must file thousands of 1099s per year. Thus, payers who file 250 or more Form 1099 reports must file all of them electronically or magnetically[2] with the IRS. The 250 or more requirement applies separately for each type of return and separately for each type of corrected return. Even though filers may submit 249 information returns on paper, the IRS encourages filers to transmit returns electronically. The complexity that arises in filing large volumes of information returns requires many filers to depend on third party information reporting software.
If the less than 250 or more requirement is met, and paper copies are filed, the IRS also requires the payer to submit a copy of form 1096. The 1096 is a summary of information forms being sent to the IRS. You need one 1096 for each type of information form you have issued.
For further information refer to Publication 1220, Specifications for Filing Forms 1098, 1099, 5498 and W-2G Magnetically or Electronically or Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding.[3] The IRS no longer accepts 3 1/2-inch diskettes for filing information returns, and tape cartridges will be phased out after Tax Year 2007. After December 1, 2008, electronic filing will be the ONLY acceptable method to file information returns to the IRS at its computing center in Martinsburg, West Virginia. One can upload 1099 returns to the IRS using their FIRE (Filing Information Returns Electronically) web site at fire.irs.gov.[4] Form 1099 is also used to report interest (1099-INT), dividends (1099-DIV), sales proceeds (1099-B) and some kinds of miscellaneous income (1099-MISC). Blank Form 1099s and the related instructions to the forms can be downloaded from the IRS website.[5]
Payees use the information provided on the 1099 forms to help them complete their own tax returns. In order to save paper, payers can give payees one single Combined Form 1099 that lists all of their 1099 transactions for the entire year. Taxpayers are usually not required to attach Form 1099s to their own Federal income tax returns unless the Form 1099 includes a report for Federal income tax withheld by the payer from the related payments.
