Differences Between Form 1040 and Form 1099
Form 1040 calculates the tax owed or the refund amount. It includes multiple details about your personal tax situation. Form 1099s report only one source of income. You won’t know if you owe taxes on that money or if you expect a refund until you incorporate that 1099 information into your Form 1040.
Form 1040
Form 1040 is the main tax form used by taxpayers to report their annual income. You will include all income, tax claims, and deductions on this form to determine whether you owe taxes or if you will receive a refund. It will tell you how much you will pay or be refunded.
Examples of Form 1099
There are many types of Form 1099. Each form is used to report a specific type of income other than salary or wages.
Form 1099-NEC is used to report income earned by independent contractors working as freelancers or self-employed individuals. It is the equivalent of the W-2 form you would receive as an employee, but taxes are not withheld. You will receive a copy from any client who paid you $600 or more during the year.
Other common examples of Form 1099 include:
- Form 1099-INT, which reports taxable interest income
- Form 1099-DIV, which reports dividend income
- Form 1099-B, which reports capital gains and losses
- Form 1099-MISC, which reports rent, royalties, and other miscellaneous types of income
Conclusion
Store your 1099 forms in a safe place upon receipt so that you can easily find them when it’s time to prepare your taxes. Tax software should automatically input your tax data into Form 1040 if you are using a program. You will enter your 1099 information, and the software will take care of the rest.
Frequently Asked Questions (FAQs)
Is it difficult to fill out Form 1040?
Filling out the Form 1040 tax return can be a complex challenge as you may have to submit additional forms and schedules with it. However, tax preparation software greatly simplifies the process. It asks you some questions and then uses your answers to include the information in your tax return and any other required schedules or additional forms.
Do I need to submit my 1099 forms with my tax return?
It is not necessary to include your 1099 forms when filing your tax return because the IRS already has that information. Payers are required to provide a copy of the form to both the money recipient and the IRS.
Source: https://www.thebalancemoney.com/1040-vs-1099-tax-forms-5181612
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