7 Key 1099 Forms for Your Business Taxes
Including Changes to Form 1099-MISC and a New Form 1099-NEC
You may have heard people refer to a "1099" or "1099 form," but there are actually 18 different 1099 forms. In this article, we'll take a closer look at seven key 1099 forms you may receive or send as a business.
These 1099 forms from the IRS are important because they give information on income received by and paid by your business. The IRS calls these forms "certain information returns."
The 1099-MISC form for 2020 taxes has been changed to remove payments to non-employees – independent contractors, attorneys (fees), and other businesses. For 2020 and beyond use Form 1099-NEC to report payments to non-employees. You can still use Form 1099-MISC to report other types of payments, including rents, royalties, and backup withholding.
1099 Form Due Dates
The due date for information returns depends on the form. There are actually two due dates for each form, one for sending the form to the recipient and another for submitting the form to the IRS. Some forms don't have to be sent unless the amount paid is over a certain amount.
|Due Dates and Other Information for 1099 Forms - 2020 and Beyond|
|Form||For:||Min. amount||Due date - IRS||Due date - recipients|
|1099-B||Proceeds from Broker or Barter Exchange Transactions||none||Feb 28*||Feb. 15|
|1099-DIV||Dividends and Distributions||$10 or more ($500 or more for liquidations)||Feb. 28*||January 31|
|1099-INT||Interest Income||$10 or more ($600 or more in some cases)||Feb. 28*||January 31|
|1099-K||Payment Card & Third-Party Network Transactions||All amounts||Feb. 28*||January 31|
|1099-MISC||Rent, royalty, attorney fees, etc.||$10 or more royalties||Feb. 28*||January 31|
|1099-R||Distributions for retirement or profit-sharing plans, IRAs||All amounts||Feb. 28*||January 31|
|1099-NEC||Payments to non-employees||$600 or more||January 31||January 31|
|* Mar 28 if e-filed|
What Is on a 1099 Form?
The basic format for each form is to provide information on taxable income and any amounts withheld from that income for federal and state income tax purposes. Each 1099 form must include the taxpayer ID number for the person or business that receives it. The taxpayer ID is matched with the information received by the IRS and with the taxpayer's tax return.
On some 1099 forms, you may see a box relating to FATCA requirements. FATCA is the Foreign Account Tax Requirements Act, which requires reporting of assets held in foreign accounts to the IRS. The requirement to file depends on the value of your foreign assets, or those of your business.
Withholding on 1099 Forms
Because 1099 forms don't include employee income, no withholding is required to be taken from these types of income. In some cases, backup withholding might need to be taken out if the IRS determines there is a problem with the payee's taxpayer ID number.
If you receive a notice from the IRS about backup withholding, you must withhold at the current rate: 24% of the total amount paid to the worker, effective for the 2018 tax year and beyond.
All of these 1099 forms use Box 4 to report federal income tax withheld.
When You Receive a 1099 Form
When you receive a 1099 form, first make sure it has your correct taxpayer ID on it. Then compare the amounts, especially taxable income and any income tax withheld, with your records. If you see a difference, contact the company that gave you the 1099 form.
Include the information from 1099 forms you receive on your business or personal tax return.
Filing 1099 Forms Online
You can file all types of 1099 forms online by using the IRS Filing Information Returns Electronically (FIRE) system. You must register with the system and get a transmission code. If you are filing 250 or more information returns (1099s and other types) in a year, you must use the FIRE system, but others are encouraged to use it too.
If your business participates in a barter exchange program, you will receive a 1099-B form from the exchange program showing the income you received from the program during the year. The 1099-B is also used to report certain broker (investment) transactions. Broker transactions may result in capital gains, either short-term or long-term.
If you or your business received income from dividends during the year, you will receive a 1099-DIV form from your financial management or brokerage firm. Amounts subject to capital gains and dividends are included, along with income from the sale of collectibles.
Form 1099-INT records income from interest on savings accounts, CD's, and other financial investments. Information on this form includes amounts of interest income, early withdrawal penalties, interest on U.S. savings bonds and Treasury obligations, foreign taxes paid, and interest expenses.
Form 1099-K records payments to your business from third-party payers. If you receive payments online or in-person through a third party (like a merchant account), the income you receive is recorded and a 1099-K is sent to you to verify that income.
You don't have to complete this form, but you should keep records of all transactions from credit and debit cards and other payers like PayPal so you can verify the amount on the 1099-K.
When you receive the 1099-K form, take the time to review it and make sure everything is correct. If there are discounts, returns, and chargebacks that haven't been deducted, contact the sender of the form to make adjustments. Since the form is sent to you and to the IRS, the two versions must match to avoid questions by the IRS.
The 1099-MISC form, as you might suspect, is a miscellaneous form that reports income paid for a variety of purposes. The form must be given to someone you have paid $600 or more during the year for a variety of payments, including
- Prizes and awards
- Royalties (for payments of $10 or more for the year)
- Medical and health care payments
- Attorneys for fees charged
The details on payments you must report is complicated. See the instructions for Form 1099-MISC and 1099-NEC for more details on the types of payments you must report on this form.
The IRS has brought back this form to use for reporting non-employee income. You must report payments of $600 or more to
- Independent contractors or self-employed individuals
- Partnerships, estates, or, in some cases, corporations
Some examples of the types of payments you must report using Form 1099-NEC include:
- Fees to attorneys
- Fees paid by one professional to another (Fee-splitting, for example)
- Backup withholding for individuals from whom you withheld federal income taxes under a court order, even if it's under $600
See the Instructions for Forms 1099-MISC and 1099-NEC for more examples.
IRS Form 1099-R
This form records income from distributions from retirement, pension, and IRA accounts. The form is given for a designated distribution from
- Profit-sharing or retirements plans
- Annuities, pensions, insurance contracts, survivor income benefit plans,
- Disability payments under life insurance contracts, and
- Charitable gift annuities, etc.
These 1099 forms can be complicated to prepare, and it's important to get the information in the right box. Get help from your tax professional to prepare or to file your 1099 form.
You may able able to use tax preparation software to include the information from a1099 form on your tax return.
You can find more information on these and other 1099 forms from the IRS, on its General Instructions for Certain Information Returns page.