Managing Those Pesky 1099sPosted on December 6th, 2016
Taxpayers may not like receiving 1099s; businesses may not like sending them out; perhaps no one likes 1099s except the IRS which allows them to easily match sources of income against tax returns.
Generally, businesses must file a 1099 for any payee (other than a corporation) who they paid $600 or more during the year. They are also required to send them to the payee by Jan. 31. However, don’t assume if you don’t get a 1099, you’re off the hook for reporting the income. There are penalties on companies that issue 1099s late, but some come as late as April or May and the information will be reported to the IRS regardless of whether you receive the form.
If you move, update your address directly with all payers and notify the U.S. Postal Service. Check any 1099s as soon as they arrive. If you notice any errors, report them to the payer immediately for correction, if they have not already filed them, or so they can submit a corrected form. If you disagree with the information on a 1099 but can’t convince the payer to change it, explain the situation on your tax return.
If you are expecting a Form 1099, but don’t receive one, report what you think the amount should be on your tax return. IRS computers have no problem with that.
There are also 1099s for interest (INT); 1099s for dividends (DIV); 1099s for state and local tax refunds and unemployment benefits (G); 1099s for pensions and payouts from your individual retirement accounts (R); 1099s for broker transactions and barter exchanges (B); 1099s for real estate transactions, etc. (S). Then there are 1099s for miscellaneous income (MISC).
Regardless of the source, report all 1099 information on your tax return. If you forget to report a 1099, the IRS will send you a computer-generated letter billing you for the taxes. If it’s correct, just pay it.
Forms 1099 are a vital part of IRS matching process. If you have any questions regarding 1099 forms or reporting, contact us or your own CPA for more information.