While 1099 forms may be old news for most of us, the new IRS 1099 forms are bringing new questions to an old subject. Let’s review. If any person does work for a business, company, or for you personally and you pay them more than $600 in a calendar year they payor is required to issue a 1099 to document the “income” for the payee. The IRS then delights in matching the amounts declared by the payors on 1099 forms with what is reported by the recipient.
There are so many 1099’s to understand:
1099-R – a new form used to report disbursements from retirement accounts such as 401(k) or IRA’s
1099-DIV – used to report the issuance of dividends
1099-G – Given for state or local income tax refunds as well as unemployment benefits
1099-INT – reports interest paid to you (usually by a bank or investment account)
1099-MISC – a catch all for other payments not covered by the others above
The basic rule is this: if you receive income from any source, report it. Even if they don’t issue a 1099. The IRS requires businesses to issue 1099’s by January 31 for monies paid out in the prior year. However, if you don’t receive one in the first week or two of February you aren’t off the hook. A company could send out 1099’s in March, April – even May or later. Yes, they have to pay a penalty for doing so, but they have rules and regulations to abide by as well. Your 1099 may simply have gotten lost on its way to you. You never know when or if the other party will report the money you’ve received to the IRS, so better to be straight forward than to suffer an IRS audit later simply because you chose not to report income that was later disclosed by another party. 1099’s are tied to your social security number, so it’s easy for the IRS to tie income back to you personally.
If you have any questions regarding new IRS 1099 forms and how to handle them Allen Barron provides tax preparation services for individuals and businesses throughout the San Diego region. We invite you to contact us to prepare your taxes at 866-631-3470.