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What is an IRS 1099 Form? When Do You Need to File it?

 


Also known as the information tax form, the series of form 1099s are used to report your income from different sources. These forms are to be filled out by self-employed individuals. Those who work for an employer get a form W-2 where the employer specifies the tax amount they have withheld from the monthly paycheck. Form 1099, on the other hand, comes in different categories, each listing information about various sources of income and the taxable amount. You can use the 1099 tax calculator to figure out your dues for the year.

IRS 1099 Form

IRS 1099 forms refer to the collection of tax documents that are filled out and filed by businesses, freelancers, independent contractors, sole proprietors, and others who do not get paid by an employer. The taxpayer fills the 1099 form with appropriate information and sends a copy of the same to the IRS. The IRS uses this form to calculate your total earnings for the year, how much you have earned from different sources, and whether you are eligible for a tax credit or refund. You must submit most of these 1099 forms by January 31st, but the state tax authority might sometimes extend the date till February 15th.

When It’s Needed?

If your income from business or any self-employed source exceeds $400, you need to file form 1099. Now, depending on your income source, you may have to check out various versions of this form and fill out the one that seems most appropriate. For instance, if you report income from unemployment benefits or the government, you must fill out form 1099-G. Your client sends you this form specifying your earnings. If you have worked for multiple clients in a year and your income from them exceeded $400, you need to ask them to issue a form 1099.

The most common type of IRS 1099 form an individual might receive is the 1099-NEC. This is for the income you’ve earned from nonemployee compensation. 

When to Send and Receive 1099 Forms?

The form is issued by the client who’s paid you more than $400 a year. The form is issued before 31st January. If you don’t receive it by this date, ask your client to issue it immediately to avoid the underpayment penalty. If January 31st is not a working day, the IRS might move the deadline to the next day. Those who are sending the 1099 forms must consider these points:

  • The recipients need the form by January 31st

  • Those filing the paper form must complete and send the form to the IRS by February 28

  • Those using tax software to fill and submit the form are supposed to send the form by March 31st.

  • There is an exception for Form 1099-NEC. These forms must be sent to the recipient and the IRS by January 31st irrespective of the mode of filing.

Hire a tax accountant to simplify 1099 tax calculation and filing. Hope it helps!

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