If you work for yourself or receive income from someone other than an employer, you will probably receive a 1099 form listing income to include with your taxes. The IRS requires that a taxpayer report all of their income, regardless of whether they receive a Form 1099. Alternatively, a business can face penalties for not issuing a Form 1099 when required.
1099 reportable means you must report payments on a 1099 form for federal taxes, according to the Internal Revenue Service. Most 1099 reportable items are related to independent contracting and self-employment. If you earned $10,000 doing freelance graphic design, for instance, you would receive a Form 1099-MISC reporting it as income.
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As of 2012, there are a dozen varieties of the 1099 for different kinds of payments. The 1099-MISC is the most common 1099 and used for contractors, such as attorneys and home workers. If you have a savings account, you will receive a 1099-INT for interest payments. The 1099-DIV contains information on stock dividends and withheld federal income tax.
A business should check the instructions for 1099 forms to determine if an item needs reported. Royalties, for example, are only reportable when payments total more than $10 annually from any one source. Miscellaneous payments are reportable on a 1099-MISC taxes when a contractor earns over $600 annually from any single entity, according to the IRS.
A business should send the original 1099 form to the IRS, a copy to the state tax department and a copy to the payee/recipient by the due date. Failure to file a 1099 form on time incurs a $50 penalty, according to IRSTaxAttorney.com.