February 3, 2015
Hold off on filing your income tax return until all Forms 1099 are received. Otherwise, you might be amending your return.
Various types of Forms 1099 are used to report different types of activities. Three of the more popular types of 1099’s are:
Some people are familiar with the 1099-Div. Most commonly, this form is used to report dividend income. The general rule is that it must be sent out to anyone who has received $10 or more in dividend income, including capital gain dividends and exempt-interest dividends.
Most people are familiar with the 1099-Int. The most common use of this form is to report interest income. The general rule is that it must be sent out to anyone who has received $10 or more in interest income.
Most taxpayers have either an interest-bearing checking account or some type of interest-bearing savings account. These are the most common types of accounts that trigger the preparation of a 1099-Int.
The most common use of this 1099 is to report payments of $600 or more for rents or services in the course of a trade or business. Some examples of uses of this form are:
- Payments for real estate
- Royalties paid to authors
- Prizes and awards that were not paid for services rendered
- Compensation to a non-employee for services
The most common use of this form is to report compensation to a non-employee for services. If the non-employee is performing these services as a corporate entity, issuing a 1099 is not required – unless the payment is for legal services. Legal services to corporate and noncorporate persons or entities must be reported if they exceed the $600 threshold.
All of these Forms 1099 must be sent to the recipient by Jan. 31 of the year following the calendar year in which the income was received.
A good idea is to wait until after Jan. 31 to prepare your income tax return so that you can be sure you are including all of the income that needs to be reported on your return. A lot of people prepare their returns early, only to realize that they had some sources of income reported on a 1099 that they did not include.
This article was originally posted on February 3, 2015 and the information may no longer be current. For questions, please contact GRF CPAs & Advisors at firstname.lastname@example.org.