About IRS Form 1099

The Internal Revenue Service (IRS) requires all businesses to document non-employee payments, larger than $600, made to individuals or other businesses during the year. A1099 Form, detailing the amount of money paid, the type of payment and the payee's name, address and tax information, is sent to the payee and to the IRS.

Significance

The 1099 Form notifies the IRS of money paid to other individuals or businesses. After the deadline for filing taxes, the IRS will cross-reference the amount you recorded on the 1099 Form with the amount of income reported by the individual or business who received the form. If an individual claims less income than is reported on the 1099 Form, it may trigger an audit.

Time Frame

You must record all payments made between January 1 and December 31 of the previous year soon after the year ends. Mail the payee's copy of the 1099 Form to arrive before the end of January. After compiling and sending the forms to everyone you paid more than $600 during the year, you will file a 1096 Form with the IRS, listing the total amount you paid to all 1099 recipients. You must file the 1096 Form by the end of February.

Size

If you have more than 250 recipients of the 1099 Form, the IRS requires you to file the information electronically or magnetically. If you have less than 250 recipients, you may use the postal system to mail your 1096 return. If you must file electronically, you may register for a free account with the IRS on their site and upload your return. (See Resources)

Identification

The IRS produces different 1099 Forms for specific classifications. For example, a 1099-MISC form documents payments made to independent contractors, real estate disbursements, tips and proceeds from crop sales. The 1099-DIV records dividends and distributions and the 1099-INT documents interest payments. You may order the appropriate forms, at no charge, from the IRS. (See Resources)

Prevention/Solution

You may download sample 1099 Forms and the instructions for completing the form from the IRS website but you may not use these forms to send to payees or to file your return with the IRS. In an effort to reduce fraudulent returns, the downloadable forms are not reproducible by scanning. The IRS may assess a $50 fine if the wrong form is filed. Order your forms early.

Misconceptions

You need not file a 1099 Form for payments made during the previous year to a corporation, even if you paid them over $600. Corporations are subject to different taxation requirements.

Resources

• Register for an IRS business account and upload your 1096 Return.
• Order the appropriate 1099 Forms from the IRS.

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[athenenoctua]

on 3/2/2009 You have given me some good tips to pursue as I prepare my own 1099. Thanks. 5*