Navigating the 1099 Waterways!

So you’ve been assigned the task of issuing 1099s for your organization. The good news is that someone has confidence in your abilities. The bad news is you may not share that same confidence. You might feel you are “up a creek with no paddle”.

 

There are HOW many types of 1099 forms???

You’ve now determined you need to issue 1099’s. How do you begin? Choosing the correct form is like choosing the proper boat for the body of water you are exploring.

1099s are called “information returns” because they return information to the IRS about transactions, usually payments of one sort or another. Your first job is to determine what transactions require reporting and what forms (1099s) are used to report them. There are currently 29 different types of 1099s out there. They all serve a purpose, and it is critical to send out the correct type of form. Issuing a 1099-MISC for non-employee compensation is completely different than issuing a 1098 for mortgage interest. With the goal of keeping both the IRS and the recipient of the form happy … consult an accountant if you are unsure which form to process.

 

You’ve got the right form, but that is just the beginning.

You are well along on your journey, paddling happily, enjoying the scenery. Perhaps you’ve purchased forms to process yourself, or you’ve decided to outsource the processing. One thing remains consistent—you need to know the reason you are issuing the 1099. No one can determine that piece for you. Knowledge of the transaction determines the correct box to list the dollar amount. While you may be wearing a nautical theme and reminiscing about your peaceful 1099 paddling journey, this doesn’t mean your dollar value automatically goes in Box 5 titled “fishing boat proceeds” on a 1099-MISC. If the 1099 is being issued for non-employee compensation, you truly need to list the dollars in box 7. The information you list must be correct for the individual filing their taxes. Getting it right the first time eliminates corrections down the road.

 

Just keep paddling…

Before calling 911 or your nearby port authority, you need to know there are resources available. While the IRS website can look intimidating, it can be a fabulous resource. On it, you will find each of the 1099 forms in pdf format. You will also find box descriptions to assist you in determining where to list your data.

Once you’ve decided you can handle the knowledge of the transactions but just don’t want to deal with the hassle of buying those forms, their corresponding envelopes and the software to make it all happen, there is another valuable resource — 1099 Connection. 1099 Connection offers seamless print, mail and e-filing services. We would welcome the opportunity to direct you on the cruise of a lifetime!

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