If you're working from home, you may be required to fill out and complete the 1099 tax form. This form is used by the Internal Revenue Service (IRS) to document income from "independent contractors." Independent contractors are those that are not regularly employed by companies; these include freelancers, independent consultants and home-based workers. The 1099 form aims to cover taxable income that is not paid by a full-time employer. Aside from contractual work, interest earned from sale of investments and money received from Social Security should also be documented using the 1099 tax form.
The 1099 tax form is issued by an employer to a non-employee or independent consultant who was paid six-hundred dollars or more during the previous tax year. Once the recipient has the form, she has the responsibility to report and pay the required taxes in relation to the income stated in the form.
Taxpayers who earn through retirement distributions, proceeds from real estate, interest income and those with debts cancelled are also required to file their tax return using the 1099 tax form. An independent contractor may have several clients within a certain tax year; she will receive 1099 tax forms from them as well.
1099-MISC Tax Form
The 1099 MISC is the most common 1099 tax form used by taxpayers. Income from game show prizes, attorney fees, rent, freelance work, crop insurance proceeds and royalty payments should be reported using the 1099 MISC tax form. Contractual workers working on a per-project basis also receive this type of form from employers. Income threshold should be more than six-hundred dollars, except for royalty fees that should be reported above ten dollars.
1099-R Tax Form
The 1099 R should be completed by those who earn through pensions, profit-sharing plans, insurance contracts, annuities and Individual Retirement Accounts (IRAs). Income and distributions of more than ten dollars should be reported. Insurance companies and brokers are responsible in issuing the 1099 R.
1099-INT Tax Form
Banks, lending cooperatives and credit unions are responsible in issuing out the 1099-INT. Income threshold for reporting is ten dollars in a single tax year, except for interest on delayed death benefits where the six-hundred dollars limit applies.
1099-DIV Tax Form
Capital gain distributions and dividend distributions should be reported in the 1099-DIV tax form. They should be reported if they exceed ten dollars within a single tax year, except for liquidation distributions that should be reported after six-hundred dollars.
1099-C Tax Form
1099-C Tax Forms are issued by lenders like banks and financial institutions to borrowers whose debts are canceled. The form is used to report gains that are taxable due to discharge or cancellation of debts that are more than six-hundred dollars.
Filing Dates and Penalties
1099 Tax Forms should be filed at the beginning of each tax year, from February to March. A penalty of fifteen dollars per form is mandated by the IRS if filed within 30 days. If later than a month and before August 1, it's thirty dollars per form. If you file it after August 1, the penalty fee is already fifty dollars per form.
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