Is a 1099 Form Like a W-2?
So the question of the day is….Is a 1099 Form like a W-2? Well, the answer is yes and no. Yes, both forms are required to be mailed to you by January 31st so you can complete your taxes. And yes, both forms list your income from a company. Now that said, Allen and Associates, Inc., the tax and bookkeeping specialists in Middle TN, explain that there are definite differences between the two.
A W-2 is a form you will receive from your employer to show the wages you made throughout the year, as well as the taxes, social security and medicare that were withheld. But what if you are a contractor and not really an employee? For example, you get hired for jobs and get paid, but no taxes, etc. are withheld from your paycheck. Guess what...this is not getting paid under the table as some like to call it. You will be receiving a 1099 in the mail, and yes, you need to claim your earnings.
That said, Allen and Associates, which by the way you can find on the web at www.aasmyrna.com, informed me that there are various types of 1099s you need to look in your mailbox for.
Independent Contractor - If you received $600 or more this past year from an employer, you will receive a Form 1099-Misc. You will recieve this from each employer you made over $600 from in 2014. Some examples of contract workers are freelance writers, consultants and construction workers.
Stockholder or Investor? There may be forms in the mail for you as well. If you own mutual funds or a portfolio of stocks and investments, you will be receiving a Form 1099-DIV in the mail because you are required to claim any dividends you received throughout the year.
Do you have a savings account? If you earned interest throughout the year on the money in savings, your bank will be sending you a 1099-INT in the mail.
Were you unemployed in 2014? If so, the government (yeah, the same one you have to pay taxes to) will send you a 1099-G to report your unemployment compensation.
Okay, only two more 1099s to go...Next up is the 1099-R. If you have made a withdrawal from your traditional IRA or have had a distribution from your pension plan, annuity or profit-sharing plan, expect this form in the mail. (And FYI..if it is an early distribution, expect to be taxed heavily).
The last one is the 1099-C. This may sound uncommon, but these days it is more common. Did you have problems paying your bills this year? It happens to the best of us. You opt to pay your electricity bill rather than your credit card. Allen and Associates understands. But that said, just know that if your credit card company writes off your total amount due and says you are paid in full if you pay 25%, you will most probably receive a 1099-C in the mail and you will have to pay taxes on the amount written off by them.
So there you have it...soooo many types of 1099’s you could possibly receive. Whether you are an individual contractor or an investor, just know they could come in the mail by January 31st. And remember, once you receive all your W-2s and 1099s in the mail, all you need to do is give Allen and Associates a call to set up an appointment to do your taxes. Don’t worry, they know all the current laws and will make it their goal to get you the most money due to you (or have you owe the least amount possible). Happy tax season:-)