A Closer Look At 1099 Forms

 

wordle3We took a look at general tax forms earlier in the week, including the 1099-MISC. Here is a guide to other 1099 forms you’ll encounter as a taxpayer. If you have specific questions regarding any 1099 form you receive, check with a  tax pro;  the descriptions below are a general overview and not intended to replace the advice of a qualified tax professional.

1099-C: If a debt is cancelled or modified through negotiation, return of property to the lender, repossession or discharge, that amount is classified as income and will need to be reported on your tax return. If the debt was discharged through a Chapter 7 or Chapter 13 bankruptcy, you are not responsible for the taxes on that debt.

1099-INT: This form is used for reporting income interest over $10.00 from any interest-bearing account such as a CD or deposit account (checking, savings). Report this income on your tax return.

1099-G: If you receive a government payment such as Unemployment Insurance (UI) or a state tax refund, the government will issue a 1099-G form.

1099-K: The 1099-K was introduced in 2011 and the rules surrounding it are a bit more complex than for other forms of income. If you picked up a weekend side gig driving for Uber or Lyft  and earned over $600.00 for the tax year, the credit card company that processes the customer payments will issue you a 1099K for the gross amount received (not taking into account expenses such as gas, mileage, phone rental, etc.). Compare the 1099K with your records. The earnings will need to be reported on Schedule C of your tax return.

Same goes for third-party processors such as PayPal, WePay, and Amazon, but the threshold is much higher. If you have an online store and incur over 200 transactions and earn over $200,000, you will receive a 1099K from that third-party processor. Rules surrounding the 1099K can be confusing your first time out, so it’s best to check with a qualified tax pro regarding your specific scenario.

1099-R: Not just for retirees. While the 1099-R is for retirement income such as pensions, annuities and IRAs, there are exceptions. If you had to make a hardship withdrawal for your 401k, for example, you will receive a 1099-R for the hardship distribution.

Other 1099s: The 1099-S (issued for income from real estate transactions), 1099-SA (Social Security Benefit Statement) and the 1099-SA (distributions from a Healthcare Savings Account, Medical Savings Account or Medicare Advantage Savings Account).

As with any income, you will need to report it on your tax return, and a qualified tax pro can answer your specific tax questions regarding these forms or income from sources outside of your “day job.” Treat the 1099 as you would any tax record: verify its accuracy,  keep it with your other tax forms, and refer to it when filing your taxes.

 

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