All about the 1099 form and its types

At the time of paying taxes, sometimes, due to the immense amount of forms, it isn't easy to distinguish between one and another. Even more when they establish similar functions, or worse, they have several functions in only one. Particularly regarding the female 1099 form, there are several types of it, and not all of them must be paid by the taxpayer.

Thus, to distinguish which one is necessary to fill out and file, it is essential to know all its types, its different functions, and who is responsible for its delivery. This article presents all the related information to clarify all these doubts and more.

What does the 1099 form consist of?

Before we start talking about its infinite forms and presentations, it is necessary to understand its function and consistency; otherwise, handling all the information concerning the form will seem an impossible task.

The 1099 form consists of a series of documents responsible for annually reporting a taxpayer's unearned income to the Internal Revenue Service (IRS).

What is a 1099 form?

The answer to this question gets a little complicated due to the absence of a fully integrated 1099 form, i.e., when you need to file this form, you need a specific type of all the existing ones.

Who must file the 1099 form?

The person required to file this form depends on the paper needed. Normally, the individual or business taxpayer must file this form to report all other income to the IRS. However, a particular document must be filed by the employer and not by the taxpayer.

We are talking about the 1099-NEC form . Although it is mentioned below under the types of conditions, it is important to clarify its function in this section. The employer must download this form.

The employer himself must ask the independent or self-employed worker who has previously performed a job to fill it out correctly for its subsequent submission to the IRS.

1099-NEC and 1099-MISC forms not the same?

Surely, when you hear about the 1099 form, you have heard about the 1099-MISC. It used to be the most requested form for reporting non-employment income. Within it, non-employee type compensation is included when hired by a large or small business.

However, in 2020, this non-employment reporting function was credited to the 1099-NEC form. This form must be used, as mentioned above, by employers. Through it, they can notify the IRS of a payment made to a taxpayer for more than $600 per year.

Of course, the taxpayer is only applicable for the 1099-NEC form if he is not a worker under the employer's company but a self-employed contractor or independent worker.

So what is the 1099-MISC form for? The area is taken from the MISC form by the NEC only corresponds to its former box number 7. As such, all other reasons for using it remain intact.

The additional payments to report on this form are rental payments, payments for individual contracts or partnerships, and crop and fishing insurance . Also, payments to attorneys, medical and health care, or prizes.

As with the NEC form, it is necessary to present an income of more than $600 per year to be eligible to fill out the MISC form. In addition, for both conditions, if the employer prefers to file them on his own, he must know the name and address of the beneficiary, his tax identification number, and the total amount of the payment made.

Types of 1099 forms

This form requires an immense number of types to cover all the necessary options at the time of filing a non-labor income. There are a total of 20 kinds of forms. However, some of them are rarely used due to their conditions. Therefore, only the most common and requested ones are shown below.

Form A

Form 1099-A is used exclusively for income obtained from payments of one or more real estate transactions. It is especially for those who lend money, and part or all of the prices are paid with real estate property or domain of it; however, it is not the only type of real estate transaction that can be reported.

Form B

It is specifically used by those who made sales of shares, contracts, or any other type of activity and trade-related to mutual fund companies and brokerage firms. It must also be filed by those who bartered through exchanging goods or services.

Form C

Form C is only used for money received from the cancellation of a debt greater than $600 . A form must be completed for each debtor who has paid the above amount.

Form DIV

Banks and various financial institutions mainly use it to report collections or payments resulting from dividends, capital gains, or any other instrument with similar operations.

Form G

It must be filed by those who benefit from any compensation due to unemployment or other conditions, including payments based on tax refunds, whether state or local.

Form INT

This form is used especially for financial institutions to report and notify the payments corresponding to each capitalized interest.

Form R

This form's purpose is to report individuals' retirement plans, whether pension distributions, IRAs, retirement plans, profit-sharing programs, etc.

To whom should the form be sent?

In the two most requested cases already mentioned, being the 1099-NEC and 1099-MISC forms, when you download them, you will find a copy A and a copy B. Copy A must be sent to the IRS and copy B to the taxpayer benefiting from the payment.

Both must be sent before January 31 and always have the beneficiary's consent. In addition, if there are any important attachments, they must also be sent to the IRS along with the 1099 form.