Do I Need to Include a 1099 With My Tax Return?

Tax season often brings a flurry of paperwork, and understanding what forms to include with your tax return is crucial. Among these, the 1099 form series reports income not captured on a W-2, such as interest, dividends, or payments to independent contractors. Knowing when to include a 1099 form with your return can help ensure a smooth filing process.

Common 1099 Forms

The 1099 series includes forms for reporting various types of income. Recognizing the key forms and their purposes is essential for accurate tax reporting.

1099-INT

This form reports interest income from sources like savings accounts, certificates of deposit, or bonds. Financial institutions issue it to anyone earning over $10 in interest annually. This income is taxable and must be included on your tax return. If your interest income exceeds $1,500, you must report it on Schedule B, which feeds into Form 1040. Keeping accurate records of interest earnings ensures consistency with the 1099-INT.

1099-DIV

The 1099-DIV reports dividends from stocks, mutual funds, or other investments, including ordinary dividends, qualified dividends, and capital gain distributions. Qualified dividends are taxed at the capital gains rate, which ranges from 0% to 20% based on taxable income and filing status. Dividends over $1,500 must also be reported on Schedule B. Even reinvested dividends are taxable and must be reported as income. Accurate reporting is essential to avoid discrepancies with the IRS.

1099-NEC

The 1099-NEC reports non-employee compensation of $600 or more paid to independent contractors or freelancers. Introduced in 2020, it replaced Box 7 of the 1099-MISC. Recipients must report this income on Schedule C or Schedule E, depending on their work, and it is subject to self-employment tax. Proper reporting on the 1099-NEC is vital to avoid penalties or audits.

Physical Attachment Requirements

The IRS generally does not require attaching 1099 forms to your tax return, especially if filing electronically. For paper returns, attachment is unnecessary unless specifically requested by the IRS. Ensure the income reported on your return matches the information from your 1099 forms to avoid discrepancies.

While physical attachment is not required, maintaining organized records of your 1099 forms is important. Keep these documents for at least three years in case of an audit or discrepancies. This retention period can extend to six years if there is substantial underreporting of income.

E-Filing Considerations

E-filing simplifies the tax return process and reduces errors compared to paper filing. The IRS’s e-file system integrates 1099 data directly into your return, minimizing manual entry errors and expediting processing times.

E-filing systems also check for errors and inconsistencies, providing immediate feedback. This can be especially helpful for taxpayers with multiple 1099 forms. Additionally, these platforms assist in identifying applicable deductions and credits, optimizing your tax outcome. E-filing provides real-time updates on your return’s status, offering transparency and convenience.

Exceptions for Not Including a 1099

In some cases, you are not required to include a 1099 form with your return. For example, if the income reported is below the IRS reporting threshold—such as less than $600 in non-employee compensation—a 1099-NEC may not be issued. However, all income, regardless of documentation, must still be reported on your return.

Another exception arises when income reported on a 1099 has already been consolidated. For example, brokerage accounts may provide a single annual tax statement that includes dividends and interest, which can simplify reporting and eliminate the need for individual 1099 forms.