1099 Reporting: Explained so a Canadian could understand it.

I often get asked about 1099 reporting in emails and comments and most of it comes from Canadians looking to figure out what gets reporting on which IRS Form 1099 and why there are so many. 

Hopefully this will shed some light on the number of forms and what they report.  I think we all kow why they are in use, right?  When a business entity or individual receives any kind of income, the IRS usually wants to know about it.  Funny how that works, eh?

Besides who received the income, the IRS also wants to know the amount of income, the entity that made the payment, and the purpose.

I feel it is important to understand that there are also other types of IRS forms that are used to report income or payments, such as employee compensation which is generally reported on a Form W2.  

Below is a list of individual 1099 Forms for specific payment reporting; 
• 1099-A – Reports Acquisition or Abandonment of Secured Property
• 1099-B  – Reports Proceeds From Broker and Barter Exchange Transactions
• 1099-C  – Reports Cancellation of Debt
• 1099-CAP – Reports Changes in Corporate Control and Capital Structure
• 1099-DIV  – Reports Dividends and Distributions
• 1099-G  – Reports Certain Government Payments
• 1099-H  – Reports Health Coverage Tax Credit Advance Payments
• 1099-INT – Reports Interest Income
• 1099-LTC – Reports Long-Term Care and Accelerate Death Benefits
• 1099-MISC  – Reports Miscellaneous Income *
• 1099-OID – Reports Original Issue Discount
• 1099-PATR – Reports Taxable Distributions Received From Cooperatives
• 1099-Q  – Reports Payments From Qualified Education Programs
• 1099-R  – Reports Distributions From Pensions, Annuities, and Retirement
• 1099-S – Reports Proceeds From Real Estate Transactions
• 1099-SA – Reports Distributions From an HAS, or Medicare Advantage MSA

Second most popular questions: Is there a minimum reporting threshold?  Answer: The minimum dollar amount that must be reported varies depending on specific types of payments. 

*Many different types of payments are also reported on Form 1099-MISC.  The requirements for reporting payments on 1099-MISC can be complicated and the IRS Instructions for 1099-MISC IRS http://www.irs.gov/pub/irs-pdf/i1099msc.pdf should be consulted.

Third most popular questions: Who gets a copy?  Answer: When a 1099 is issued, one copy is retained by the payee for their records, one copy is send to the recipient of the payments, and a copy is sent to the IRS for reporting.
Is there an electronic filing requirement?  Any filers who have over 250 or more to report are required to file with the IRS electronically.

What is the deadline?  The reporting deadline to the IRS is February 28th, however, if the filer is reporting electronically, the deadline is March 31st.

In most cases the payment recipient should receive their copy of the 1099 by January 31st.

There are some exceptions to the recipient due date. Form 1099-B, 1099-S, and payments reported on 1099-MISC for proceeds paid by attorneys and certain payments reported by brokers have until February 15th for the payment recipient copy.

Individuals that receive payment as reported on a 1099 are generally required to report those payments on Form 1040 as income. Business entities may have to report payments as part of their income.

Hope this helped!

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CRA Electronic Filing Guidelines for 2009

The majority of common information returns (original and additional) must be filed electronically in 2009 if there are more than 50 information returns for each type—such as;

  • T4 Statement of Remuneration Paid
  • T5 Statement of Investment Income
  • T3 Statement of Trust Income Allocations and Designations

The following information returns must be filed electronically using the Internet;

  • T3 Statement of Trust Income Allocations and Designations
  • T4 Statement of Remuneration Paid
  • T4A Statement of Pension, Retirement, Annuity, and Other Income
  • T4A-NR Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada
  • T4E Statement of Employment Insurance Benefits
  • T4RIF Statement of Income From a Registered Retirement Income Fund
  • T4RSP Statement of Registered Retirement Savings Plan Income
  • T5 Statement of Investment Income
  • T5007 Statement of Benefits
  • T5008 Statement of Securities Transactions
  • T5018 Statement of Contract Payments
  • NR4 Statement of Amounts Paid or Credited to Non-Residents of Canada

The following information returns must be filed electronically as this is the only way they can be accepted by the CRA:

Originals only:

  • AGR-1 Statement of Farm-Support Payments
  • SAFER Manitoba Shelter Benefits
  • T4A(OAS) Statement of Old Age Security
  • T4A(P) Statement of Canada Pension Plan Benefits

Originals and amended:

  • T4E Statement of Employment Insurance Benefits
  • T1204 Government Service Contract Payments
  • RRSP Contribution Receipt Filing
  • TFSA, Tax Free Savings Account

Information returns can be filed electronically using Internet File Transfer (XML). The CRA can accept files of up to 150 megabytes. If your file is more than 150 megabytes, you can still file using the Internet File Transfer application by either compressing or dividing each submission so that it is no more than 150 megabytes. For T4 returns, this means that filers can send approximately 160,000 returns in an uncompressed file and 1.6 million returns in a compressed file. For T5 returns, this means that filers can send approximately 260,000 returns in an uncompressed file and 2.6 million returns in a compressed file. For T4 returns, filers can use T4 Web forms (up to 3 returns) and T4 Desktop Application (up to 70 returns), in addition to Internet file transfer (XML). For more information on Internet filing, go to Filing T4/T5 information returns electronically.