Form 1099 is an information return used to report income other than wages, salaries and tips. Generally, the entity paying is responsible for issuing Form 1099, although if the funds are paid to an intermediary, such as a broker or agent, it is this middleman who must issue the form. There are more than a dozen 1099 forms, each designed for a different type and source of income. The following are among the most common 1099 forms and the entities required to send them.
If you borrow money, it’s not considered taxable income unless the debt is canceled. Form 1099-C is used to report taxable gain as a result of the cancellation or discharge of a debt of $600 or more. The entity to which the debt was owed (the lender) is required to issue the form. This can include banks or other financial institutions, such as credit unions, state or federal government.
Dividend income is taxable. But, because the stocks on which dividends are paid are usually held by a broker or other institution, it is this entity, as the intermediary, who must issue Form 1099-DIV. Dividend distributions, capital gain distributions and even nontaxable distributions are reported on Form 1099-DIV if they exceed $10, with the exception of liquidation distributions, which are reportable after $600.
Interest income is reported on Form 1099-INT. The threshold for reporting is $10 in a single year. Banks, credit unions, savings and loans, lending cooperatives, associations, and other depository institutions often have the responsibility to file this form. Brokers that pay interest on uninvested deposits also frequently have this obligation and typically report interest payments to an account holder even if not required by the Internal Revenue Service (IRS). A $600 threshold applies to certain types of interest, such as interest on delayed death benefits paid by a life insurance company or interest on a state or federal tax refund.
Form 1099-R is used to report distribution from retirement accounts such as pensions, annuities, IRAs, profit-sharing plans and insurance contracts. All distributions of more than $10 must be reported. The entity with the obligation to issue is the broker or insurance company that pays the distribution, provided it is paid directly to the taxpayer. If paid to an intermediary, the intermediary will have the obligation.
By far, the broadest reaching of the information returns is Form 1099-MISC, which is used to report miscellaneous income. This includes such diverse income sources as gaming prizes and awards (including those won on TV shows), rent, royalty payments, payments to crew members of fishing boats, crop insurance proceeds, payments to physicians or health service suppliers, and proceeds paid to an attorney. Any compensation to contract workers not considered employees is also reported on this form. The reporting threshold is $600, except for royalties, which must be reported above $10, and attorney fees, all of which must be reported. The obligation is typically on the payer, unless, as is often the case with royalties, payment is made to an agent on behalf of the recipient.