In the financial world, January in the US is known as “1099 month.” Banks, brokerages, payroll services, and CPAs spend many hours preparing the documents. Taxpayers wait for them with mixed emotions, knowing they need the information to do their tax returns and at the same time dreading having to figure out exactly what numbers to report where.
The IRS loves 1099s.
There are lots of different types of 1099s. Some of the more common ones you’ve probably seen include
- 1099-DIV (dividends and distributions)
- 1099-INT (interest income)
- 1099-B (proceeds from broker and barter exchange)
- 1099-C (canellation of debt)
- 1099-G (certain government payments)
- 1099-R (distribution from persions and retirement plans)
- 1099-S (proceeds from real estate transactions)
As a self-employed business owner (or a single member LLC) filing a Schedule C, you’ll probably get 1099s from clients and customers showing how much they paid for your services. The form you’ll receive is the 1099-MISC and the dollars you earn as an independent contractor will be reported in Box 7 as non-employee compensation.
But there are lots of questions (and misunderstandings) that I often hear about 1099s.
- What if I don’t get a 1099?
- What if the 1099 has the wrong amount?
- What if the income reported on the 1099 doesn’t all belong to me?
For a much more detailed discussion about 1099s, including what’s new for the 2011 filing season, what changes you need to prepare for in 2012, and what to do if your 1099 is wrong, click here.
