Which 1099 Tax Forms Concern You

I

t’s tax time again and you      the form no later than February
must be sure to receive all     28, 2006. But which 1099 form
the necessary forms. What       will you receive?
is a 1099 tax form and who gets
one? A Tax Form 1099 is used to       If you are classified as an
report income other than wages,       independent contractor (i.e.
salaries and tips. Here of late,      attorney, guest speaker,
this term is used more and more       performer, physician, rent,
frequently as many employers are      etc.), or you receive income that
opting to use contract labor          is classified as non-employee
versus hiring employees, who can      income, or miscellaneous income
turn out to be quite expensive        (you were paid $600 or more) you
when you factor in the insurance,     will receive what is known as a
payroll taxes, and other possible     1099-Misc.; these are the
liability. If you had an              information returns most often
independent contractor perform        received for contract for-hire
$600 more of services to you or       work, leased workers, or general
your business, you are required       contractor payments for which
by law to complete and deliver a      there is not a direct sale as a
1099 form to that person or           merchant to a consumer.
business. This article will take
a look at the different 1099 tax      The other most often used 1099
forms, their purpose, who can         tax form would come as a
receive one, and why.                 1099-Int; this is a 1099 received
                                      for interest income purposes;
The 1099 tax forms, if you are        whether the income be from a bank
the recipient, should be              or any lending institution, or
furnished to you by January 31,       from the sale of a seller
2006, and must be furnished and       financed mortgage, the recipient
filed by the company furnishing       of any income from interest will

receive a 1099-Int. You would         dividends, total capital gains,
receive a statement that              qualified dividends, foreign tax
summarizes your interest income       paid, federal income tax withheld
for that year. This form is also      and foreign source income.
used to report other tax items
related to your interest income       Another 1099 can come as a 1099-B
such as early withdrawal              for barter exchange transactions.
penalties, federal tax withheld       What does this mean? It means
and foreign tax paid. A close         that instead of monetary payment,
relative of the 1009-Int is the       you received a bartered form of
1099-OID. This is an information      payment, an exchange of something
return provided when you receive      other than money, with value
an original issue discount,           attached in order to pay for a
usually from transactions related     service.
to mortgages served by the
Federal Housing Authority.            Other less used 1099’s are
                                      1099-A, 1099-C, 1099-CAP,
The 1099-Div tax form is used         1099-LTC, 1099-Q, 1099-R, and
often for investors. This tax         1099-SA; the R, Q and SA are for
form is sent to investors by          retirement and social security
brokers, mutual funds or the          payments, and are received by
investment company. The form is a     many retired individuals. The
record of all taxable gains and       payments from IRAs, MSAs,
dividends paid to an investor.        Coverdell ESAs, and HSAs are
The amounts that are stated on        reported on these 1099s. The
the form represent amounts the        1099-A is received is there has
fund companies are attributing to     been an acquisition of secured
each investor’s investment return     property, or an abandonment of
for the year. The amounts on the      secured property.
1099-Div could contain ordinary

1099-C is received if there is a      Long-term care and accelerated
cancellation of debt, as from a       death benefits are filed on this
bankruptcy proceeding, credit         1099; with a larger segment of
card default, or other failure of     our population aging, this
a maker to make good on a debt        segment also known as the “baby
that the lender or seller can use     boomers” will make more use of
as a tax deduction. The 1099-CAP      long-term care insurance and
is a 1099 used to report              payouts, and many of them will
significant changes in corporate      receive these types of 1099s.
control and capital structure.
What does this mean in laymen’s       Although these are most often
terms? If you and several other       forms of taxable income to the
individuals are in business           recipient, this is not always a
together, as an incorporated          steadfast rule. For many of the
entity, and 3 of you buyout           older citizens, for individuals
another individual, you will be       receiving the tax returns as part
required to furnish that              of a discounted program through
individual with a 1099CAP so that     the government, and for certain
the individual reports any income     other situations, these are only
or gain from the capital sale of      information tax returns that do
stock.                                not result in added income tax
                                      liability. For the rest of us,
A 1099 tax form that we’ve not        however, a 1099 tax form usually
seen very much until recently,        means we have increased our
but one that I’m sure we’ll see       income tax liability.
much more of in the not too

distant future is the 1099-LTC.

About the Author:

Keith Hoyng is the web master and operator of http://www.quickcash2u.com which is an excellent source of financial, travel, remodeling, and more key information. Visit us at http://www.quickcash2u.com/TaxHelp.html