| There are two classes of income information that | | | | Account will include all three information forms in |
| tax authorities like the Internal Revenue Service | | | | one document. |
| (IRS) use to track income; IRS Form W-2 and | | | | Form 1099-R, Distributions from Pensions, |
| IRS Form 1099. The IRS W-2 family of forms | | | | Annuities, Retirement or Profit-Sharing Plans, IRAs, |
| report wages, salaries, tips and, most important, | | | | Insurance Contracts, etc. reports distributions of |
| various federal, state, and voluntary tax | | | | $10 or more from an individual retirement |
| withholdings. There are however, many forms of | | | | arrangements (IRAs) or other annuity, pension, or |
| compensation and fund distribution that are not | | | | profit-sharing plan. See IRS Form 5498, IRA |
| considered wages or salary. The large number of | | | | Contribution Information if you have made |
| different 1099 forms are used to report all this | | | | contributions to individual retirement arrangements |
| tax-relevant information. Attach a copy of IRS | | | | (IRAs). In 2002 the "special" education IRA was |
| Form 1099 to your tax return when the form | | | | renamed a Coverdell Education Savings Account |
| shows any taxes withheld from reported | | | | (ESA). Distributions are reported on the Form |
| compensation or distributions. Here is a list of | | | | 1099-Q, Payments from Qualified Education |
| some of the more common information | | | | Programs. See IRS Form 5498-ESA, Coverdell |
| documents: | | | | ESA Contribution Information, if you maintain a |
| Income classified as non-employee or | | | | Coverdell Education Savings Account (ESA). |
| miscellaneous revenue, or any form of | | | | Distributions from tax deductible health (medical) |
| compensation paid to independent contractors | | | | savings accounts (HAS) used for medical |
| (like consultants, home care workers, artists, etc.) | | | | expenses are reported on Form 1099-SA, |
| is reported on a 1099-MISC, Miscellaneous Income. | | | | Distributions From an HAS, Archer MSA, or |
| These forms also report money paid for | | | | Medicare Advantage MSA. Code "W" in Box 12a |
| contract-for-hire work, to leased workers, or | | | | on the form indicates distributions from Health |
| general contractor payments. Compensation | | | | Savings Accounts and Archer Medical Savings |
| reported on this IRS form will often have no | | | | Accounts. IRS Form 1099-LTC, Long-Term and |
| taxes withheld. | | | | Accelerated Death Benefits show gross long-term |
| Form 1099-INT, Interest Income is used when | | | | care benefits and accelerated death benefits paid. |
| more than $10 (or at least $600 of interest paid | | | | Use IRS Form 8853, Archer MSAs and |
| in the course of a business activity) of interest is | | | | Long-Term Care Insurance Contracts to report |
| reported for income purposes, when federal | | | | these distributions. |
| taxes are withheld from funds and when foreign | | | | Reporting debt income generated from the |
| taxes are paid. It is probably the most common | | | | cancellation of a taxpayer's recourse debt is very |
| 1099 form received by individual taxpayers. It is | | | | important and can have significant effects on |
| also reports taxable income related to interest | | | | your tax liability. Form 1099-A, Acquisition or |
| from, for example savings accounts and penalties | | | | Abandonment of Secured Property, reports |
| related to early withdrawal of funds from IRA. | | | | information arising from foreclosure, repossession, |
| Box 2 shows interest or principal forfeited | | | | or an abandonment of secured property. These |
| because of early withdrawal penalty. Box 4 shows | | | | financial acts are treated as either the exchange |
| the amount of federal tax withheld. Box 3 shows | | | | or sale of property. They can result in a capital |
| interest received from US Saving Bonds, | | | | gain and taxable income. A Form 1099-C, |
| Treasury bills, notes, or bonds. | | | | Cancellation of Debt document resulting from, for |
| Similar to a Form 1099-INT, Form 1099-DIV, | | | | example, bankruptcy or cancellation of consumer |
| Dividends and Distributions, is provided by | | | | debt, can also show potentially taxable income |
| investment, mutual funds, and brokerage | | | | from the forgiven debt. |
| companies, to report taxable income and any tax | | | | Form 1099-OID, Original Issue Discount is issued |
| withholdings from ordinary and qualified dividends | | | | when an original issue discount on US Treasury |
| paid to the holder of record during the tax year. | | | | obligations is received on maturation of the issued |
| The 1099-DIV also reports capital gains, foreign | | | | paper, usually from transactions related to |
| tax, investment expenses, and liquidation | | | | mortgages served by the Federal Housing |
| distributions. When a barter exchange is | | | | Authority. Box 6 shows the amount of the |
| substituted for monetary payment in a financial | | | | discount received on US Treasury obligations. Box |
| transaction, the value of the payment for the | | | | 4 shows the amount of federal tax withheld. Any |
| goods or services is reported on a Form 1099-B, | | | | early withdrawal penalty and investment |
| Proceeds From Broker and Barter Exchange | | | | expenses may also be indicated on the |
| Transactions. Oftentimes a broker's Statement of | | | | information form. |