1099 forms are information statements that are sent to you and to the Internal Revenue Service by the payers of certain amounts that must be reported for tax purposes. You may need to report different amounts from these statements on different forms and schedules that you must file with your annual income tax return.
The 1099 forms are a series of tax reporting statements that must be issued each year for certain types of payments, distributions or transactions. You will need this information to prepare your annual income tax return. Each of the different forms contains figures and information that may have to be reported on a particular line of Form 1040 or 1040A, or on one of the other schedules or forms you need to file with your tax return. In some cases, you will need to take this information into consideration along with other criteria and information in order to determine any amounts you are required to report for tax purposes. The 1099 forms constitute official tax documents and should be kept with your tax files and other financial records.
1099 Statements – Income
The following are the 1099 statements you may receive after the end of the year, with a brief description of the type of information they contain and some indications of what you may have to do with this information.
1099-A – Acquisition or Abandonment of Secured Property
If you abandon property that has an outstanding loan secured by the property, such as your home secured by a mortgage loan, the lender must provide you with this statement. The lender must also report any interest it acquires in the secured property, such as in a foreclosure or repossession. It will indicate the date on which it acquired an interest in the property (the foreclosure date, for example) or the date it learned that the property had been abandoned.
Generally, if the lender acquired an interest in the property, such as in a foreclosure, you would have a reportable gain or loss for the difference between your adjusted basis in the property and the amount realized, which would normally be the amount of debt cancelled (box 2) or the proceeds from the foreclosure sale, whichever is greater. If the property was for personal use, the gain would be reported on Schedule D, and a loss would normally not be deductible. If the property was business or income-producing property, the gain or loss would be reported on Schedule 4797. If the fair market value of the property (box 4) is less than the outstanding debt (box 2) and you are personally liable for the debt (box 5), the difference is the part of the gain on the foreclosure that you would have to report as ordinary income.
Abandonment of the property can result in a loss for the amount of your adjusted basis in the property, and income for the amount of debt cancelled. Income from the cancellation of debt on personal property, such as your home, would be reported as “Other Income” on Form 1040. If the property was business or rental property, the income from cancellation of the debt would normally be reported on Schedule C or E, as applicable.