1099 Income Tax Form

The tax department issues a variety of forms, so that it can categorise the different types of tax filings and also make the filing procedure more easy for the people. Taxes are charged on different types of incomes that an individual or a company earns. Forms simplify the gathering of information of the type of income and the person or entity who has earned it.

1099 Income Tax Form is basically for a freelancer who is not a regular employee of any organisation or company. The freelancer can also be termed as a small business entity, as person works for himself and is not employed by anyone on a regular basis. Usually the work will be specific to a particular project and when it ends the person collects his income and moves on to another project from a different or same person. The income stream is based on completion of different projects and may not be regular. Some of the people and jobs which fall under this category would be freelance writing, contractors, self-employed handymen, actors, jobs involving selling of products on a commission basis only and other freelance jobs.

Usually the 1099 Income Tax Form is given by the person employing the freelancer. This form will be the proof of income the freelancer has earned from that person. Even if the person employing the freelancer does not provide the 1099 Income Tax Form, it is the obligation of the freelancer to report the income to the IRS through this Form.

The 1099 Income Tax Form will only state the earned income and does not have any information about deductions like social security, medical and so on. But the information on this form is used to prepare the annual return on income tax. The figures and information on the 1099 Income Tax Form has to be written on the 1040 type of forms. The 1099 form is an official tax document and has to kept as a part of the financial and tax records.

The 1099 Income Tax Form is made in a set of three copies by the payer. One copy is retained by the payer, one is given to the freelancer who receives the payment, and one is sent to the IRS. This form serves, more as a source of information, rather than an actual Income Tax return. According to law every payment made to a contractor or any other freelancer, which is $600 or more requires to be recorded on a 1099 form.