If you have employees working for you, it is mandatory for you to file W-2. This goes for all of the employees you have. Just like how you file a W-2 for your employees, you must file Form 1099 every contractor or freelancer that worked for you. Same as how employees use their W-2 to file their taxes, self-employed individuals must use their 1099-MISC to file their taxes.
Form 1099 is a series of documents just like W-2 and issued by Internal Revenue Services. Every tax year, the deadline for filing 1099 is January 31st, again, same as W-2. Other than the income paid to contractors, there are a couple of other things that 1099 includes. The rest of the post includes everything you need to know about Form 1099.
Freelancers and Independent Contractors
If you are self-employed and have business clients, they should file a 1099 Form for income paid to you. As someone who will not receive a W-2 from an employer, you must gather your 1099-MISC documents and use them to file your federal income tax.
More information about Form W-2
However, even if you don’t receive a 1099-MISC from one of your clients, you have to report your income to the IRS.
The 1099 Form for 2019 tax year is due on January 31st. So if you haven’t received your 1099 by that date, consult with the IRS. From February 15 and so on, you can file your taxes if you have accurate information needed to file your tax return.
Other than these, there are a couple of scenarios in which you may receive 1099.
Other Uses of Form 1099 – Government Payments
Both federal and state governments must report income to taxpayers. All government agencies use Form 1099-G to report the state’s income tax refund. Also, it reports unemployment compensation if you receive any. Those who receive unemployment income must include the Form 1099-G on their tax return.
– Retirement Account
The money in which you withdraw money from a traditional Individual Requirement Account (IRA) is taxable. For withdrawing money, you will receive Form 1099-R which reports the total withdrawal amount for the entirety of the tax year.
The Form 1099-R also includes the taxable amount of your withdrawals for that year. It also the federal tax that was withheld from it.
– Debt Cancellation
In many cases, canceled debt is treated as taxable income. If a creditor canceled a part of your debt, the IRS will count it as taxable income. To get in the way of this, the creditor may send you a Form 1099-C so you can report the canceled debt amount on your tax return.
– Dividends and Interests
Those who own mutual funds or stocks may receive a Form 1099-DIV. The Form 1099-DIV reports the dividends and other distributions you receive during the tax year. Don’t mistake this with income though. The payments like this are not income and are different from selling stocks. It simply the payment of the company’s earnings to its shareholders.
Excluding the dividends, the other type of investments you have may pay interest payments. In this case, the interest payments are taxable just like dividends and can be seen on Form 1099-INT. This will be sent to you by the bank(s) that you have interest-bearing accounts.