1099 vs. Non-1099 Payments: What’s the Difference?

Everyone in the U.S., including individuals, businesses, non-profit organizations, and trusts, must report certain transactions to the Internal Revenue Service (IRS) on a regular basis.

The 1099 series of informational forms is one way to submit this information. Business owners use Form 1099-MISC to report payments to independent contractors. Form 1099-C reports the cancellation of debt payments. Form 1099-DIV and 1099-INT are used to report dividend and interest payments. These are considered 1099 payments, along with compensation for royalties, payments of commissions, rents and annuities, cash payments to fishermen, crop insurance proceeds, and prizes and awards.

Payments are also reported on an assortment of other, non-1099 payment forms. Employers report employee earnings (payments) on Form W-2 and a summary of all employee information on Form W-3. Forms 940 and 941 are used to report payroll tax payments. Mortgage interest payments are reported on form 1098. Many taxpayers file form 1040 U.S. Individual Income Tax Return, 1040-A or 1040-EZ annually to report federal income tax payments. Form 1041 is used to report payments through estates and trusts. These are all examples of non-1099 payments.

Payments to corporations are generally non-1099 payments unless legal services are involved. Utility payments, merchandise purchases, and telephone payments are not reportable as 1099 payments in most situations. Payments made to tax-exempt organizations are also considered non-1099 payments.

Each reportable non-1099 payment will have specific filing requirements and deadlines. The IRS offers tools to assist with deadlines including calendars. Publication 1518 holds a wealth of date- driven information and is available at www.irs.gov.

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