The Facts

• For certain kinds of payments, the IRS requires that the payer file information with the IRS detailing the amount and type of payment made. These various miscellaneous payments made to taxpayers should be reported on 1099 forms. When required, 1099 forms are filed with the IRS and delivered to the payee for use in filing his taxes. There are many kinds of 1099 forms. The most common is the 1099-INT, which reports interest income on a wide variety of accounts including standard savings and money market accounts. Other 1099 forms include 1099-DIV, which reports dividends and distributions including dividends paid by companies to stockholders; 1099-G, which reports certain government payments including tax refunds; and 1099-R, which reports distributions from retirement accounts, including a pension, 401k, and IRA, which are considered taxable.
  
  

Time Frame

• Individuals and businesses must file 1099 forms with the IRS and send them to the taxpayer. Most 1099 forms are due to the taxpayer by January 31 of the year following the year in which the income was reportable. For example, for payments made in 2008, the associated 1099 form would be due to the taxpayer by January 31, 2009. Most 1099 forms are due to the IRS by February 28 of the year following the year in which the income was reportable.
  
  

Significance

• The IRS keeps secret its methods for checking taxpayer filings. However, it is known that the IRS does use computer systems to verify that the numbers reported by the taxpayer match the various reportings made by the payees. In this case, the IRS may use such a system to ensure that taxpayers are not under-reporting income including interest earned on savings accounts or dividends paid by stocks that investors may inadvertently overlook since they are not the more traditional forms of income.
  
  

Features

• Forms are standardized by the IRS. Although each 1099 form has its own requirements, most forms share several common elements. These elements include the taxpayer name, the taxpayer ID number, the taxpayer's address, the amount of the payment, and the payee's name, ID number and address. In addition, some 1099 forms have check boxes that allow the payments to be further characterized.
  
  

Identification

• Standardized 1099 forms typically have the words "Department of Treasury - Internal Revenue Service" at the bottom of the form. In addition, forms are identified by name in at least one location with the form number. For example, Form 1099-DIV is visible in two places on the standard IRS form. Most 1099 forms are required to have an IRS defined disclaimer, such as: "This is important tax information and is being furnished to the IRS."