Form 1099 is the holy grail of tax forms. It’s the form submitted to the IRS by the person who pays you. Nevertheless, it comes in many different variations. The self-employed will have them. The employed will have them. In addition, anyone else you think of will likely have a type of the 1099 IRS form.
So why is Form 1099 the most important of all?
Income Statement
The 1099 form is essentially a statement of what you earned and who paid it to you. This is how the IRS determines how much tax you will need to pay to the Federal government this year. They tend to scrutinize this form more than most because even a slight slip-up could radically change the amount of tax you pay.
Independent Contractors
Independent contractors must use the Form 1099-MISC to account for any client who hires them and subsequently gives them more than $600 in income. As you can imagine, this demands excellent record keeping because this can get wild and confusing fast.
Stocks and Shares
The form 1099-DIV is for any investments you happen to have. If you receive dividends from various investments throughout the year, this is the form you have to fill out.
Interest also comes under this category, so you must not leave it out.
Conclusion
The form 1099 is the most important because it’s the statement of everything you have earned in the last year. For most people, this will just be the job they happen to have. For others, it will include a range of investments and private projects.
Make sure you get it right the first time!
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