Forms 1099 constitute a series in the set of more than eight hundred forms and schedules used mandatorily by individuals and corporations to report their financial affairs to the Internal Revenue Service (IRS). The IRS categorizes Forms 1099 as information returns and stipulates that these forms be used for reporting non-employee compensation. Non-employee compensation recorded on Forms 1099 include interest, dividends, royalties, payments from the United States (US) government, capital gains, prizes, income from self-employment and remuneration of independent contractors. Essentially, Forms 1099 document earnings excluded from Form W-2 which reports emoluments such as salaries, wages and tips.
Each Form 1099 reports a specific category of non-employee compensation. Consequently, each Form 1099 has an alphabetical suffix as part of its number, besides having a self-explanatory name. Seventeen Forms 1099 are on the “Forms and Publications (PDF)” website of the IRS, at http://apps.irs.gov/app/picklist/list/formsPublications.html;jsessionid=RtsgHgNvZfuwydb84V-LnQ__?value=1099&criteria=formNumber&submitSearch=Find. The names and numbers of these forms are in Exhibit 1.
Separate from the Forms 1099, the IRS has published general instructions for completing these forms and individual instructions for completing each. The forms’ layout also aids their satisfactory completion.
Forms 1099 are to be filed by all entities that made applicable disbursements to individuals or organizations during the tax year.((What are applicable disbursements)). The tax year coincides with the calendar year. Brokers who receive dividends, for shareholders, must file the appropriate Form 1099. Similarly, a lending institution files Forms 1099 if it forgives debt or acquires property that secures loans.
The payee’s name, Taxpayer Identification Number (TIN) and address are required for completing Forms 1099. For every US citizen, the TIN is the social security number. Resident and non-resident aliens must apply for a TIN. Each Form 1099 is completed in quadruplicate: respective copies are issued to the payee, the IRS and the applicable State Tax Department; the filer retains the appropriate copy. The IRS does not require the filing of some Forms 1099 if an applicable payment was less than six hundred dollars.
Following the end of each tax year on December 31, the preparer of the Form 1099 must send appropriate copies to the payee by the following January 31 and to the IRS by the following February 28. This February 28 deadline applies to paper copies; the deadline for presenting electronic copies is the following March 31. Electronic filing must be via the Filing Information Returns Electronically (FIRE) System, if the filer presents at least two hundred and fifty forms. Below this minimum, if paper copies are presented, the summary Form 1096 must accompany the Forms 1099. The IRS will extend its deadline by thirty days if the preparer files a Form 8809 before the initial deadline. Professional tax preparers must present Forms 8809 electronically if they seek extended deadlines for more than fifty different filers.
Completed Forms 1099 must be error-free, addressed properly and mailed by the due date. According to the addresses of the filers, the forms are to be posted to the IRS processing center in Kansas City, Missouri or Austin, Texas.