The 1099 Form, Explained and Annotated
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The 1099 Form, Explained and AnnotatedBox 1, Rents: If you paid rent for your business space to an individual, this is where you enter the total amount you paid during the calendar year. You can also enter amounts for things like equipment rentals, as long as they’re paid to an individual.Box 2, Royalties: If you are paying someone for property rights (whether physical, like mining, oil, or gas; or intellectual, like in the case of a patent or copyright) enter the total amount you paid here.Box 3, Other Income: Basically if you provided a taxable payment to someone over the amount $600 and it doesn’t fit in any of the other boxes, it goes in Box 3. Need more details? Pub 525 gets right into the nitty gritty of what qualifies as “other income”.Box 4, Federal Income Tax withheld: This box is where you’ll reports any taxes that you withheld from the amount entered in Box 3.Box 5, Fishing Boat Proceeds: This field likely doesn’t apply to you, but on the off chance that you are the owner of a fishing boat and you’re issuing this 1099 to a member of your crew, you’re in the right place! Enter the amount paid to them here.Box 6, Medical and health care payments: Did your business make a payment of $600 or more to an individual who provided medical or health care services this year? Report that amount here.Box 7, Nonemployee compensation: This is the box that you’ll most likely use to report any payments paid to a contractor or other non-employee. Not sure if a payment qualifies? The IRS provides these four guidelines for determining if this Box 7 is the right place to enter it:
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- You made the payment to someone who is not your employee.
- You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
- You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
- You made payments to the payee of at least $600 during the year.
1099-MISC
This is the form that your business will usually use, and is issued to your contractors or other non-employees.1099-DIV
If you own stock and you receive over $10 in payments, you’ll need to file a 1099-DIV.1099-INT
You’ll receive this if a financial institution has paid you more than $10 in interest in a calendar year. (Lucky you!)1099-C
If you forgive a debt of over $600 you are required to file a 1099-C form. Likewise, if you have a debt of over $600 forgiven by someone else you are required to include it on your tax return as income and pay taxes on it.1099-G
You will receive a 1099-G if you receive payments from the government such as unemployment insurance, tax refunds, or grants.1099-K
Your business will receive a 1099-K from debit or credit-card providers if the total amount of gross payments for the provider adds up to over $20,000 and there are over 200 of them.1099-R
You’ll receive this form when you receive payments from a retirement plan, pension, annuity, or IRA.1099-S
This form is used to record real estate transactions. If you sold property for less than $250,000 and it’s a primary residence, you don’t need to file a 1099-S. If you sold property for over $250,000, however, or for a property that will not function as a primary residence you will file this form as part of your individual taxes. Don’t worry though, if you use a lawyer to complete the sale (as most people do) they will likely file the paperwork for you.1099-SA
You will have a 1099-SA issued to you if you received payments from a health care spending account or medical spending account.SSA-1099
Likewise, the SSA-1099 is issued to you if you received Social Security benefits during the past calendar year. Just think of the 1099 series of forms as a way to keep track of any significant sum of money ($600 is often the magic number) paid to or received by an individual who is not employed by the payer. And now that you know 1099s inside and out – the different types, and when and how to fill out each and every field – tax season just got a little bit easier.Discover more from My Business Web Space
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