Form 1099 is an income summary form given to you by an individual or organization, with the tax ID number of the issuing organization and the SSN of the recipient (you). When a company, organization or someone else gives you a 1099 form, it means that they have also reported to the IRS the behavior and amount of money they gave you this year. The one in your hand is for tax declaration. Remember to declare when you file tax at the beginning of next year, otherwise it will be easy to be taxed and even fined.
Usually our 1099 can come from various institutions and departments, but in fact 1099 is a general term for a type of form. The key is to look at the letters after 1099. The 1099 forms that are relevant to most people are as follows:
1099-NEC (Nonemployee Compensation): For non-employees earning more than $600
1099-DIV (Dividends and Distributions): Annual summary of investment income or dividends
1099-INT (Interest Income): Interest income, if you earn more than $10, you will receive it
1099-B (Proceeds From Broker and Barter Exchange Transactions): Annual summary of purchases and sales of stocks, options, commodities, and other trading instruments
1099-K (Merchant Card and Third Party Network Payments): The transaction amount is $20,000 and at least 200 transactions will be received
1099-MISC (Miscellaneous): Miscellaneous Income
The following are the common ones:
The 1099-NEC that often appears with the W-2 is the non-employee tax return, which is paid by project or task contract gratuity, which often occurs among independent contractors, temporary workers, and self-employed individuals. The difference between it and W-2 is that in W-2, the employer needs to pay a certain percentage of federal/local taxes for you from your pocket, but the tax in 1099-NEC must come entirely from your own income.
There is also a 1099, Form 1099-MISC (Miscellanious), which is an annual summary of miscellaneous income, such as rent income, copyright income, fishing income, etc. In the tax year, when someone or an organization pays you at least $600 (or greater than or equal to $10 in copyright fees/income in lieu of dividends or interest), you need to issue Form 1099-MISC to you.
Friends who do business or drive Uber may also receive Form 1099-K, which is a tax bill issued after using a credit card and a third-party payment platform. After individuals receive money from guests from these institutions, third-party platform institutions (such as Paypal) will aggregate these incomes in the form of 1099-K, and then send them to the government and you respectively. However, the third party is unable to explain to you what the data in the tax form should be declared. You are obliged to explain to the government the meaning of the data in the 1099-K form and pay taxes at the beginning of the year through the form of “tax return”. 1099-K is somewhat similar to 1099-NEC, but there are also 12 monthly grids listed in detail, which can be filled in one by one according to monthly income.
In addition to the several common 1099s mentioned above, there are others such as:
1099-A (Acquisition or Abandonment of Secured Property): Acquisition or abandonment of secured property, transfer of property for foreclosure;
1099-C (Cancellation of Debt) debt offset;
1099-H (Health Coverage Tax Credit (HCTC) Advance Payments): Medicare Tax Credit Advance Payments, recipients may be eligible for Health Coverage Tax Credit (HCTC);
1099-G (Certain Government Payments): payments from the government;
1099-S (Proceeds from Real Estate Transactions): Proceeds from real estate transactions.
In general, there are many classifications of 1099 tax forms, and different units have different purposes. In order to avoid unnecessary trouble and fines, no matter what 1099 you get, please remember to file taxes.
Personal tax must be submitted annually by yourself or your family or by an accountant, and cannot be done by the unit or institution you work for. Normally, the period from the end of January to April 15th is the time window for summarizing and declaring the income of the previous year, and fines may be incurred if it is overdue. In addition to the federal tax bureau IRS at the national level, various tax forms and material submission departments may also have state and local tax bureaus, financial supervisory bureaus and other departments. In order to standardize the large-scale tax declarations across the country every year, the formal “organization” or “person” that gives you funds/assets should provide relevant vouchers and tax forms before you file taxes, such as W-2 or 1099-NEC for employers to pay wages, 1099-INT for the bank to issue interest, 1099-G for the government to issue unemployment benefits, etc. It should be noted that if there are errors/omissions in the personal declaration, there may be a progressive fine according to time, please make sure to pay the tax in time; at the same time, please collect or scan all tax forms, bills or vouchers for tax inspection purposes.
The opinions expressed by HHL Advisors Group are for information sharing only and do not constitute any legal advice.
Do not reproduce without authorization.
