1099 Tax Software Blog

The 1099 IRS forms or information returns are used to report a wide variety of income to the IRS.  Each 1099 IRS form is followed by a few letters to describe the type of information that is being handled:

• Form 1099-A reports acquistion or abandonment of secured property.
• Form 1099-B reports the sale of stocks, bonds, mutual funds and other securities.
• Form 1099-C reports the cancellation of debt.
• Form 1099-CAP reports change in corporate control and capital structure.
• Form 1099-DIV reports dividends, qualified dividends, and capital gains distributions.
• Form 1099-G reports payments from state governments such as unemployment compensation and state tax refunds.
• Form 1099-INT reports interest income earned.
• Form 1099-K reports merchant card and third-party payments.
• Form 1099-LTC reports long term care and accelerated death benefits.
• Form 1099-MISC reports various types of miscellaneous income including rents, royalties, and non-employee compensation.
• Form 1099-OID reports original issue discount income.
• Form 1099-PATR reports patronage dividends paid by a cooperative.
• Form 1099-Q reports payment from qualified education programs (under sections 529 and 530).
• Form 1099-R reports distributions from a retirement plan such as an IRA, 401(k) or pension.
• Form 1099-S reports proceeds from the sale of real estate.
• Form 1099-SA reports distributions from an hsa, archer msa or medicare advantage msa.

The 1098 series consists of:

• Form 1098 reports mortgage interest.
• Form 1098-C reports contributions of motor vehicles, boats and airplanes.
• Form 1098-E reports student loan interest.
• Form 1098-T reports tuition.

The 5498 series consists of:

• Form 5498 reports IRA contributions.
• Form 5498-ESA reports Coverdell ESA contribution information.
• Form 5498-SA reports HSA, Archer MSA or Medicare Advantage MSA information.

Other information returns are:

• Form 1042-S reports foreign person’s us source income subject to withholding.
• Form 1097-BTC reports bond tax credit.
• Form 8027 reports employer’s annual information return of tip income and allocated tips.
• Form 8955-SSA is an annual registration statement identifying separated participants with deferred vested benefits.
• Form W-2G reports certain gambling winnings.
• Form W-2 and W-3 reports wages to Social Security.

The list keeps growing.  IRS Form 1099-K is a new form that started in 2012. In 2011, the IRS created IRS Form 3921 and 3922 which reports which employees receive stock upon exercise options.

You can download any 1099 tax form from the IRS website.  This first page of the form goes out of the way to say

“Do not file copy A downloaded from this website. The official printed version of this IRS form is scannable, but the online version of it, printed from this website, is not.  A penalty may be imposed for filing forms that can’t be scanned.”

There are a few key points to take from this paragraph:

1. Copy A is a red-ink form. It is a special red-ink.  If you try to print Copy A with store bought red-ink, its not the same type of red-ink that the IRS uses to print out the 1099 forms. The IRS is asking you to not print Copy A and try to submit because store-bought red-ink forms will not scan correctly.

2. You can print Copy B or C to plain paper with black ink.  Copy B and C is the payee and payer copies.  You don’t even have to print and mail Copy B to the recipient.  You can convert to PDF and email or just print it out and hand the form to the recipient.

Form W-2 is different.  While Form W-2 is developed by the IRS, you paper or electronically file with the Social Security Administration (SSA).  SSA developed substitute Copy A forms for the W-2.  Software developers will receive a PDF of the substitute W-2, W-3, W-2C and W-3C forms in June or July.  Then can build those substitute forms into their software application and then mail the forms to SSA for review.  SSA will test to see if the forms will align with their scanners.  If they do, then that software developer will receive a letter of approval letting them know that their substitute forms can be read by SSA scanner equipment.  You receive on letter of approval for the W-2, W-3 forms and another for the W-2C, W-3C forms.

An employer can print Copy A of a substitute Form W-2 on plain paper with black ink.  Its a great feature and service offered by SSA.