If you have never received a 1099 form before, you may want to familiarize yourself with this important tax form. MWE tax partner Lance Christensen and tax director Debbie Oster talk to U.S. News & World Report about the form, why you may receive one, common types of 1099 forms, and why it’s never a good idea to ignore one.
What Is a 1099 Form?
A 1099 form is a tax document filed by an organization or individual that paid you during the tax year. “Employees get W-2s. This is the equivalent of a W-2 for a person that’s not an employee,” says Debbie Oster, certified public accountant and director of tax compliance at Margolin, Winer & Evens in Garden City, New York. The entity that paid you fills out the 1099 form and files it with the IRS, typically before Jan. 31 for the previous year’s income. Next, the recipients of the payment get their own copies in the mail so they can report the income received on their tax returns.
What if I Ignore the 1099 Form?
Two words: bad idea. Organizations and individuals reporting 1099 income to you are also reporting it to the IRS. If you ignore the form, “you’re going to get a notice because the computer at the IRS gets a copy of the 1099, and that information is in there,” Lance Christensen says. If you fail to report taxable 1099 income, he says, you’ll typically get 30 days to pay what you owe, plus a penalty and interest, or dispute the information with the IRS. Read more>>