Explaining these
ubiquitous forms and their uses.
Provided by Taylor McClish
What is a 1099 form? This is a record of payment from an individual or entity, showing a
payment, generated for your records. The individual/entity sends a copy to both
the payee as well as the I.R.S.1
Who might be sending 1099s? Clients send their freelancers 1099s, recording work performed. Banks
send 1099s to reflect interest from a savings account. A state may send a 1099
for a tax refund. If the financial institution who handles your retirement
account writes you a check, they will also send you a 1099.1
In
any event, a 1099 includes the taxpayer identification number or Social
Security Number of the payee. Receiving the 1099 does not automatically mean
that the payee owes tax, as there could be situations that offset that income,
but it definitely means that the I.R.S. also has a record of that payment.1
There
are many types of 1099 form. Here are a few of them:
1099-A. This form is a consequence of foreclosure or bank
repossession of secured real property – “acquisition or abandonment,” in I.R.S.
terms. Lenders send it to the foreclosed party and the buyer.1
1099-B. Brokers and barter exchanges report proceeds from
securities, futures, commodities, or barter exchange transactions with a
1099-B.1
1099-C. The 1099-C reports debt cancellation. You must claim the
indicated amount on the 1099-C form as income in the year the debt was
forgiven. When you pay income taxes on that amount, the creditor cannot come
after the debt again. This form sometimes follows a foreclosure.1
1099-CAP. This one is for those who own shares in a corporation that
has been acquired or has undergone a significant change in capital structure.
If it was sold or changes have been made where you’ve earned cash or stock, for
example, this form would be necessary.1
1099-DIV. When you receive dividends,
capital gain distributions, or liquidation distributions, you get one of these.
For example, when a mutual fund sells off funds and realizes a capital gain,
the fund informs you of your share of the capital gain through a 1099-DIV.1
1099-G. This form reports payments from government agencies and
qualified state tuition programs – everything from state and local tax refunds
and unemployment benefits to agriculture payments, gambling winnings, and
taxable grants. It is usually issued to show unemployment benefits or a state
tax refund.1
1099-INT. This form reports interest income of $10 or more, and
sometimes other tax items related to interest income (such as federal tax
withholding or early withdrawal penalties).1
1099-LTC. As the LTC part hints, these forms report distributions
(payments) from long term care insurance contracts and accelerated death
benefits paid out as a result of a life insurance contract or a viatical
settlement.1
1099-MISC. This category includes “miscellaneous income,” including
awards and prizes.1
1099-OID. The 1099-OID reports the difference between the stated redemption price
of a bond at maturity and the issue price of that bond.1
1099-PATR. This form reports patronage dividends, such as in a farm
cooperative.1
1099-Q. Have you been paying for school
expenses from a 529 plan or a similar savings plan? Withdrawals will be
reported on this form.1
1099-R. The 1099-R reports distributions from all types of retirement, pension,
and profit-sharing plans as well as any IRA or annuity contract.1
1099-S. The 1099-S reports gross proceeds from real estate transactions
or exchanges.1
1099-SA. This form reports distributions from Health Savings Accounts
(HSA), Archer Medical Savings Accounts (Archer MSA), or Medicare Advantage
Medical Savings Accounts (MA MSA).1
Questions? Are you thinking you should have received one of these
forms? Or maybe sent one of these forms? Be sure to talk with a qualified tax
professional or qualified financial professional today; they can help you generate,
request, and understand the 1099 forms in question.
Taylor McClish may be reached at (503) 239-3060 or Taylor.McClish@cunamutual.com
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Citations.
1 - nerdwallet.com/blog/taxes/what-is-a-1099-form/ [8/22/18]