1099 form
Definition
A 1099 form is a tax document used to report various types of income other than wages, salaries, and tips. It is commonly used for freelance earnings, interest, dividends, and other miscellaneous income sources.
5 Must Know Facts For Your Next Test
- The 1099 form must be sent to the recipient by January 31st of the following year.
- There are several types of 1099 forms, such as 1099-MISC for miscellaneous income and 1099-INT for interest income.
- Failure to report income from a 1099 can result in penalties and fines from the IRS.
- Recipients of a 1099 form are responsible for paying taxes on the reported income since it typically does not have tax withheld.
- Saving a portion of your freelance or miscellaneous income can help cover any tax liabilities that arise from the reported amount.
Review Questions
- What is the purpose of a 1099 form?
- By what date must a 1099 form be sent to its recipient?
- Why is it important to save some of your freelance earnings if you receive a 1099 form?
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Related terms
W-2 Form: A tax document used by employers to report an employee's annual wages and the amount of taxes withheld from their paycheck.
Freelance Income: Earnings received by individuals who work independently rather than being employed by someone else.
Tax Liability: The total amount of tax that an individual or business owes to the government.
