Form 1099 – What is it? Do I Need to Send One?

Form 1099 Due Date Coming Soon!

The new year is approaching, and 1099s are due once again. What is a 1099? Do you need to file them? Well, let’s start with the initial question. What is a Form 1099? A Form-1099 is an informational return. It provides specific information to the Internal Revenue Service.

Do you need to file a form 1099? Of the 17 1099 forms, there are 3 forms that are most commonly used. They are the Form 1099-DIV, the Form 1099-INT, and the Form 1099-MISC. In regards to a 1099-DIV, it is required to file a form 1099-DIV for each person to whom you have paid $10 in dividends, including capital gains dividends and exempt-interest dividends and other distributions on stock or $600 or more in liquidations.

A 1099-INT form is required for each person to whom you have paid more than $10 in interest, interest on savings bonds & treasury obligations, and/or tax-exempt interest.

Form 1099-MISC has a few more requirements. If you have paid out any of the following you are required to file a 1099-Misc for each person/business:

• $10 in royalties or broker payments
• $600 in the following:
  • rents and services; prizes and awards; other income payments
  • medical and healthcare payments;crop insurance proceeds
  • cash payments for fish you purchase from anyone engaged in the trade or business of catching fish; any fishing boat proceeds
  • the cash paid to a notional principal contract to an individual, partnership, or estate
  • gross proceeds of $600 or more paid to an attorney

The 1099-MISC sounds very complicated. For more detailed information on this form, you can download an informational whitepaper, Just the Basics, IRS Form 1099-Misc.

Each of the Form-1099s are required to be sent out to the people with whom you have done business. Each form has multiple copies. This is provided so that you can send one copy to the person in question; keep a copy for your records; and file a copy with the IRS. The initial copy needs to be sent out to your independent contractor – the person you do business with- by January 31, 2013. This is true, no matter which 1099 form you need to issue. You have until February 28th, 2013 to file the forms with the IRS, if you are sending in the paper forms by mail. If you are electronically filing the forms, you have until March 31, 2013.

If this seems a bit overwhelming, contact the tax specialists at Next Level Accounting & Tax. We are always ready to lend a helping hand, with answers to your tax questions.