A Form 1099 is a record of income earned outside of employment. The issuer generates the form and sends it to you and to the IRS. The form includes the amount earned and your Social Security number or federal tax ID number, also known as an employer identification number or EIN.
This information alerts the IRS that you received the money. You might or might not owe taxes on this income in the current year because deductions can potentially offset it or some or all of the revenue might be tax-deferred.
Issuers must mail most 1099s by Jan. 31. Brokerage firms have until Feb. 15 to send out Form 1099-B because it's more complex than a standard 1099.
Types of 1099 Forms
There are different 1099s for different kinds of compensation, but they all serve the same purpose – they report the income to the IRS. Those who receive 1099s are often independent contractors, have received government payments, own a portfolio of stock investments or mutual funds, have withdrawn money from a retirement account, or have debt cancellations. Specific 1099 forms are as follows:
- 1099-A: Acquisition or Abandonment of Secured Property
- 1099-B: Broker and Barter Exchange Transactions
- 1099-C: Debt Cancellations
- 1099-CAP: Corporate Control and Capital Structure Changes
- 1099-DIV: Dividends and Distributions
- 1099-G: Government Payments
- 1099-H: Advance Payments from Health Coverage Tax Credit
- 1099-INT: Interest Income
- 1099-K: Third Party Network Transactions and Payment Card
- 1099-LTC: Long-Term Care and Accelerated Death Benefits
- 1099-MISC: Miscellaneous Income including Rents, Services, Prizes and Awards, Medical and Health Care Payments and Other Income Payments
- 1099-OID: Original Issue Discount
- 1099-PATR: Taxable Distributions Received From Cooperatives
- 1099-Q: Payments From Qualified Education Programs
- 1099-R: Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs and Insurance Contracts Distributions
- 1099-SA: HSA, Archer MSA, or Medicare Advantage MSA Distributions
When Should Clients Receive Forms 1099?
Issuers must validate and postmark 1099s by Jan. 31. Form 1099-B, which summarizes gains and losses of stock transactions, is more complex than a standard 1099, so brokerage firms have until February 15 get it completed and postmarked.
Occasionally, a Form 1099 can get lost in the mail. As a client, you can contact the issuer for a copy if you haven't received it. A missing 1099 can become a problem if you don't have your own records reflecting income by the issuer, but as long as you know the amount earned through a particular entity or person and have documents to back up that amount, there's no problem with not having a Form 1099.
You might want a copy regardless, however, to make sure the amount on the form matches the amount of income reported. If it doesn't, you could be flagged for an audit because the IRS matches every Form 1099 it receives from the entity or person issuing it against the client's tax return.
It's important for an issuer to have your most recent address, as information on a Form 1099 comes through your Social Security number and it might not be the most up to date. You can update addresses directly with the issuer, put in a forwarding order at the post office or file a change of address with the IRS itself using Form 8822.
After a Client Receives a Form 1099
After receiving your Form 1099, make sure the information on it is correct. If there's any disagreement with the payer, it's important to clear it up before submitting your tax return to the IRS. Get in touch with the issuer and ask for a corrected form if necessary. Your corrected form should have the "CORRECTED" box checked at the top.
For more information about Form 1099, contact the IRS through its website or call toll-free at 1-800-829-1040 with any questions or concerns.