The Internal Revenue Service series of Form 1099 are referred to as “information returns.” They are required for reporting certain business transactions. There are a number of different 1099 forms, and which one must be filed depends on the type of payment being reported.
Types Of 1099 Forms
Certain payments made by a business must be reported on one of the various 1099 forms. For instance, capital gains distributions, such as dividends paid to a shareholder, are reported on a 1099-DIV form. Non-employee compensation is reported on a 1099-MISC form. An example of this is when you or your business does work for a company and are paid but you are not an employee for the company. You are considered to be an “independent contractor,” and the company issues you a 1099. Other types of payments reported on 1099s include agriculture payments, annuities, non-employee auto reimbursements, charitable gift annuities, non-employee commissions, interest income, IRA distributions and pensions. A detailed list of the forms and what is to be reported on them is provided online at IRS.gov.
Who Must File 1099 Forms
Any person or business that conducts a reportable transaction during the taxable year is required to file the appropriate 1099. If you pay someone so that it falls within the 1099 requirements, you must file a 1099 with the IRS and send a copy to the recipient. For example, if you have a business that pays commission to a salesperson who is not an employee, you must file a 1099-MISC, reporting all commission payments. The salesperson must also be sent a 1099-MISC.
The 1096 Form
The payer who issues a 1099 form must also file a 1096 form with the Internal Revenue Service. This form, the “Annual Summary And Transmittal Of U.S. Information Returns,” lists the payer’s name, address, employer identification number or Social Security number, the type of 1099 forms being filed and their total amount.
Filing 1099 And 1096 Forms
Unlike other tax forms, 1099 and 1096 forms cannot be downloaded from the IRS’s website. Copy A of the 1099 and the 1096 form appear in red print and must be ordered from the IRS on its website or by calling toll free 1-800-829-3676. Photocopies are not acceptable and a penalty of $50 per information return may be imposed for filing forms that cannot be scanned.
Copy A of all 1099 forms must be sent to the Internal Revenue Service. Copy 1 is for the state tax department. Copy B is for the recipient. Copy 2 is to be filed with the recipients state income tax return when required. Copy C is for the payer. Accompanying Copy A to the IRS from the payer must also be Form 1096.