How to Use a 1099 Form

Art: My name is Art Auerbach, I’m tax director with Goodman and Company, and this segment is what to do with your forms 1099INT or DIV or form 1099-B, for broker or barter.
Male: How and when do I use a 1099?
Art: Now the first piece of this 1099INT and DIV, you will need schedule B, as in boy, on form 1040. Part one of schedule B is for interest stake up, so you take any of your 1099INT’s, you list the name of the payer from the 1099 and the amount that’s taxable. For 1099DIV, that’s part 2 of form 10, of schedule B or form 1040, you list the payer of on the name of the 1099 and the amount of some things that people tend to mix up here. You may have a brokerage account at a brokerage house. They will issue you the 1099. But those dividends may be from a whole wide of securities that you hold in the brokerage account. Only list the brokers name in part 2, coz they’re the ones that issued the 1099B. To give you an example of how you can get into problem if you listed all of the individual stocks, you may total the correct number, the problem is when it gets to the Internal Revenue Service, they only have a 1099B from the broker and it looks like you omitted that, so they’ll send you a bill thinking you omitted the dividends. So it’s really important for INT or DIV to copy the name that’s in payer box on the 1099 and get the right amount out there for interest and dividend, so that takes care of 1040 schedule B isn’t void. Once you complete part one and part two, that translates to lines 8 and 9 on the front page of the 1040. So you take your total from part one, you bring it over to the interest income line on the front page of the 1040. You do the same thing for the dividends, pretty easy. If you have a 1099B, that means you transacted social security. For that, you need a form schedule, schedule D, as in David, for form 1040. And you’ll have to know what are your short term gains and losses, things you held less than a year. What are your long term gains and losses, things that you held more than a year. If the broker has accurate reporting information, it may only mean reported or taken the information of the brokers form. But that would be for schedule D. Right now, we’re handling 1099INT or DIV, and the last item to mention here is what happens if I have a foreign account? I have decided to invest abroad with a foreign financial institution. They are under no obligation to send you a 1099. Just because you don’t get a 1099 doesn’t mean you omit the income. You still have to report the interest and dividends, if the account abroad is more than 10,000 dollars, watch the two questions on the bottom of schedule B. You may have a foreign account that will require you to file another form with the treasury department. I know that a lot of folks who are listening to this, please be very careful with the foreign account questions, this has become an extremely sensitive issue with the internal revenue service after 9/11. What they are concern with is money going into or out of the United States that may be supporting terrorist activities. So the foreign account question should be answered truthfully and accurately and if there is an additional form to attach, then do so.


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