Forms, forms and more forms

There are many forms to remember as part of owning a business. There are forms to document employee wages, forms for contractors, forms for donated vehicles, forms for acquisitions … the list goes on and on.

Understanding what each form is, and which ones you need to fill out, is an important aspect of your business. Today we’re breaking down some of the most common information return forms and what gets reported on them.

First we’ll start with a definition. An information return is a tax document businesses use to let the IRS know about transactions. These forms are mandatory, meaning you don’t get a choice in filling them out and reporting your transactions to the IRS.

Now on to the forms …

 

Form W-2

The W-2 is also known as the wage and tax statement. It should be pretty familiar as it is used to document wages, tips and other compensation, Medicare, Social Security, income tax withholdings and more for each of your employees.

Every employer in a trade or business with employees who are compensated for their work needs to fill out the Form W-2 for them. If income, social security or Medicare tax was withheld, you get to fill out this form for your employees.

Deadline:

  • To recipient: January 31, for federal and most states
  • To IRS: January 31both e-file and paper copies

 

Form W-2G

Form W-2G is a specific form used for gambling winnings and losses. You will need to file a W-2G if you receive:

  • $600 or more in gambling winnings (if the payout is at least 300 times the amount of the wager)
  • $1,200 or more in winnings from bingo or slot machines
  • $1,500 or more from keno
  • More than $5,000 from a poker tournament

As a friendly reminder, all gambling winnings are subject to income tax.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099 Series

The Form 1099 series is a group of forms used to report ordinary kinds of payments, such as dividends, interest, retirement distributions and miscellaneous income payments.

Form 1099-MISC

Form 1099-MISC is filed by a business for payments made to nonemployees who do work for your business or trade. In other words, if they’re not an employee, but you’re paying them for a service, you have to report it on Form 1099-MISC.

Form 1099-MISC is required for each person you’ve made payments to based on the following criteria:

  • $10 or more in royalties or broker payments in lieu of dividends or tax-exempt interest
  • $600 or more in rents, services, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish you purchase or cash paid from notional principal contract to an individual, partnership or estate
  • Any fish boat proceeds
  • Gross proceeds to an attorney
  • Direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment
  • Any backup withholding regardless of the amount

Deadline:

  • To recipient: January 31, for federal and most states
  • To IRS: February 28 or March 31 (if filing electronically) or January 31 (if any payments for nonemployee compensation are reported in box 7)

 

Form 1099-DIV

This form is used for dividends and distributions. Specifically it’s filed for each person for whom you’ve:

  • Paid dividends and other distributions on stock of $10 or more
  • Withheld or paid any foreign tax on dividends and other distributions of stock
  • Withheld any federal income tax under the backup withholding rules
  • Paid $600 or more as part of a liquidation

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-INT

The Interest Income form is used for reporting interest payments when:

  • Interest of $10 or more is paid or credited on earnings
  • Interest of $600 or more from other sources in the course of trade or business
  • Forfeited interest due to premature withdrawals of time deposits
  • Federal backup withholding and foreign tax withholding and paid on interest
  • Payments of any interest to bearers of certificates of deposit

This form is specifically for interest payments made in the course of your trade or business, including federal, state and local government agencies.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-OID

Form 1099-OID is also known as the Original Issue Discount. It’s used when you purchase a bond for lesser price than the face value or principle amount. This discount is given instead of a bond earning interest. If you purchase a bond for less the face value, you should receive a Form 1099-OID, which is where you report $10 or more in gross income from that bond.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-R

This form is used to report any distribution of $10 or more form pension sharing or retirement plans, any individual retirement arrangements, annuities, pensions, insurance contracts, etc. It’s also used to report death benefit payments made by you as the employer that are not part of a pension, profit-sharing or retirement plan.

The fun part about Form 1099-R is that there are nine numeric codes and 18 alpha codes to use when reporting amounts in box 7 of the form. For more information on these, and what to put in what box, check out our W2/1099 ebook.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-PATR

This form is specific to cooperatives and must be filled out if $10 or more in distributions paid from the cooperative is passed through to their patrons. This includes any domestic production activities deduction and certain pass-through credits.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-LTC

This form is used if you pay any long-term care benefits, including accelerated death benefits. Payers include insurance companies, governmental units and viatical settlement providers.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-SA

Here we’re looking at reporting distributions made from an HSA, Archer MSA or Medicare Advantage MSA. Form 1099-SA can be used if the distribution is paid directly to a medical service provider or to the account holder. A separate return has to be filed for each plan type.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-A

Also known as the Acquisition or Abandonment of Secured Property, Form 1099-A is used for each borrower you lend money to in connection with your trade or business. Specifically, this applies to the full or partial satisfaction of a debt.

Deadline:

  • To borrower: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-C

Use this form for each debtor for whom debt of $600 or more was cancelled. Specifically, you must file Form 1099-C if:

  • You are a financial institution
  • A credit union
  • A corporation that is a subsidiary of a financial institution or credit union
  • A federal government agency
  • An organization whose significant trade or business is the lending of money

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-B

Form 1099-B is specifically for a broker or barter exchange. It must be filled out for each person for whom the broker:

  • Sold stocks, bonds commodities, regulated future contracts, foreign currency contracts, debt instruments, etc. for cash
  • Received cash, stock or other property from a corporation that the broker knows had stock acquired in an acquisition
  • Exchanged property or services through a barter exchange

Deadline:

  • To recipient: February 15
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-K

This one is specific to a payment settlement entity (PSE) for payments made in settlement of reportable payment transactions within the calendar year.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1099-Q

Form 1099-Q is used for payments from qualified education programs. Specifically, you must file this form if you’re an officer or employee having control of a program established by an eligible educational institution and have made a distribution from a qualified tuition program.

Deadline:

  • To recipient: January 31
  • To IRS: February 28 or March 31 (if filing electronically)

 

Form 1042-S

This form is used to report income subject to withholding paid to nonresident aliens, foreign partnerships, foreign corporations or nonresident alien or foreign fiduciaries of estates or trusts.

Deadline:

  • To recipient: March 15
  • To IRS: March 15

 

The moral of the story

This is a high level overview of just some of the information returns that exist. It’s important to understand what forms apply to your organization and what information to report on each form. To learn more, check out our W2/1099 year end planning book or contact your business advisor.

 

 

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