IRS Income Information Forms

Wage earners are familiar with the IRS form W-2, Wage and Tax Statement. But, the W-2 is not the only form used for reporting taxpayer income to the IRS. Forms 1099 serve many income reporting purposes, as indicated by appended letters. While all 1099s report sources of income, a tax doctor may be needed to distinguish one from another, to know the significance of each, and to place the data correctly in a tax return.

Common Form W-2 Reports Earnings and Withholdings

Form W-2 reports earned wages, tips, and other compensation such as bonuses, vacation pay, or severance pay. It summarizes state and Federal taxes withheld, social security and Medicare payments, as well as retirement plan deductions, and advance earned income credit, among other data. Data appearing on a W-2 has been reported to government accounting agencies and is used to complete the taxpayer's Federal, state, and local tax returns. Form W-2G reports gambling winnings greater than $600.

Forms 1099 Report Multiple Income Sources

Income information Forms 1099 appear in many varieties and are used by the IRS for reporting money paid out for delivery of services or for cancelled, or forgiven, debts.

Form 1099-G reports unemployment compensation or received a state or local tax refund greater than $10. The 1099-G is also used to report agricultural payments and taxable grants of $600 or more and qualified state tuition program payments of any amount.

Form 1099-MISC reports at least $600 earned for the year, but not as a regular employee. Federal, state, social security, and Medicare taxes are not withheld. This form must be submitted to the IRS by the person receiving services and a copy provided to the service provider, or taxpayer. The taxpayer is responsible for paying the taxes due on the amount received.

Form 1099 is also used to report regular interest and dividends paid to taxpayers. The 1099-INT and the 1099-DIV are used to report income of $10 or more. The 1099-R is used to report distributions of $10 or more from taxpayers' pensions, annuities, retirement or profit-sharing plans, individual retirement arrangements, and insurance contracts.

Debt Cancellation Reported as Income

With the upturn of housing foreclosures associated with the economic downturn in 2009, an increase in the number of two Forms 1099 should be expected in the 2010 tax season. Form 1099-A, acknowledges the abandonment or acquisition of real property that secured a loan. And, the 1099-C acknowledges the forgiving of a debt of $600 or more. A forgiven debt is considered as a form of income for the taxpayer receiving a 1099-C.

Each of the Forms 1099 required by the IRS provides information about some form of taxpayer income and needs to be reported properly on the taxpayer's return. If the IRS has a record that a taxpayer received money that wasn't reported at tax time, they may send an audit letter asking the taxpayer to account for the discrepancy.