Business People

Difference between 1040 and 1099 Forms

Main Difference

There are different types of forms which have been introduced by Internal Revenue Service of the United States that have to be filled and submitted on a yearly basis depending on the nature of work that is being done and the job a person is performing. These two forms 1040 and 1099 are very different from each other. The form 1040 is used for submitting details of income from which a person is earning on a yearly basis while the form 1099 is the one which has to be presented to the individual who is contracting of selling stuff.

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Comparison Chart

Basis of Distinction 1040 Forms 1099 Forms
Usage Used for submitting details of income from which a person is earning on a yearly basis The one who has to be submitted for the individual who is contracting of selling stuff.
Source For people who are earning through wages, payments, and tips For the persons who are running businesses on a bigger level.
Requirement Has to be filled by people who are earning even the smallest amounts. No requirement of filling this form by individuals who are making less than $600 every year.
Nature Is of two pages of personal details and tax prediction Is much more complex and additional documents required.

1040 Forms

1040-formThese are one of the IRS (Internal Revenue Service) forms which are used for taxpayers and the companies which do not have to pay tax to report all the information related to their finances in the United States. The stuff which is included in these types of forms include the total pay, total income, calculate tax which is to be given to the government and show other data which is required depending on individual circumstances. The Form 1040 is one of those which is used for the US Individual Income Tax Return, and these are the ones which are available in three types depending on the requirement. The first one is 1040 Long Form, the second one is 1040 short form, and the last one is 1040 EZ form. These are used to tell the details based on personal data and show the federal income tax returns to the IRS. The first of these forms was published in the year 1913, and after 1916 it was made a yearly form which has to be filled by people who are working at the time or have some income source. The IRS initially used to send them over the mail, but now a person has to obtain it from the department. The form itself has two pages, on the first one the details about the individual who has to fill the form are entered, they also include what are the sources of income and how the adjustments are made. The second page is for calculating the total tax which is to be paid with the help of deductions and additions that are required.

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1099 Forms

1099-formAs explained earlier the department of revenue of the United States has different forms which are available for people to fill depending on the nature of their job, how much they are earning and what is the source. One similar type is the 1099 series in which people have to report their sources of income which are other than the usual wages, salary, and tips which they get from customers. The best example of this will be the money that has to be transferred from one account to the other after the signing of an agreement. The forms are therefore also known as 1099 contractors since they are frequently used by people who are doing this work, though it has many other purposes. After the year 2011, anyone who buys or sells property also has to fill this form depending on the nature of the place which is being rented or sold. The person who is making the payment or the one who is getting the amount has to fill the form. Four copies of this are used, the first one is for the payer, the second one is the one who receives, one is from the IRS, and the last one is for the State Department for Tax. There is another requirement that a person who files more than 250 forms also has to fill the 1096 form while the one who submits less than 250 only has to fill a standard IRS form. If a person is earning less than $600, then there is no requirement of filing this form on a yearly basis.

Key Differences

  • The form 1040 is used for submitting details of income from which a person is earning on an annual basis while the form 1099 is the one which has to be presented to the individual who is contracting of selling stuff.
  • The form 1040 is for people who are earning through wages, payments, and tips while the form 1099 is for the individuals who are running businesses on a bigger level.
  • The form 1040 has to be filled by people who are earning even the smallest amounts while there is no requirement of filling this form by individuals who are earning less than $600 every year.
  • The form 1099 is to be filed by people who have to show different sources of income which are other than their job while the form 1040 has to be submitted by people who have one job.
  • The form 1040 has two pages on which personal details and tax to be paid is reduced while the form 1099 is much complicated and has many details.