1099 Reporting: Explained so a Canadian could understand it.
I often get asked about 1099 reporting in emails and comments and most of it comes from Canadians looking to figure out what gets reporting on which IRS Form 1099 and why there are so many.
Hopefully this will shed some light on the number of forms and what they report. I think we all kow why they are in use, right? When a business entity or individual receives any kind of income, the IRS usually wants to know about it. Funny how that works, eh?
Besides who received the income, the IRS also wants to know the amount of income, the entity that made the payment, and the purpose.
I feel it is important to understand that there are also other types of IRS forms that are used to report income or payments, such as employee compensation which is generally reported on a Form W2.
Below is a list of individual 1099 Forms for specific payment reporting;
• 1099-A – Reports Acquisition or Abandonment of Secured Property
• 1099-B – Reports Proceeds From Broker and Barter Exchange Transactions
• 1099-C – Reports Cancellation of Debt
• 1099-CAP – Reports Changes in Corporate Control and Capital Structure
• 1099-DIV – Reports Dividends and Distributions
• 1099-G – Reports Certain Government Payments
• 1099-H – Reports Health Coverage Tax Credit Advance Payments
• 1099-INT – Reports Interest Income
• 1099-LTC – Reports Long-Term Care and Accelerate Death Benefits
• 1099-MISC – Reports Miscellaneous Income *
• 1099-OID – Reports Original Issue Discount
• 1099-PATR – Reports Taxable Distributions Received From Cooperatives
• 1099-Q – Reports Payments From Qualified Education Programs
• 1099-R – Reports Distributions From Pensions, Annuities, and Retirement
• 1099-S – Reports Proceeds From Real Estate Transactions
• 1099-SA – Reports Distributions From an HAS, or Medicare Advantage MSA
Second most popular questions: Is there a minimum reporting threshold? Answer: The minimum dollar amount that must be reported varies depending on specific types of payments.
*Many different types of payments are also reported on Form 1099-MISC. The requirements for reporting payments on 1099-MISC can be complicated and the IRS Instructions for 1099-MISC IRS http://www.irs.gov/pub/irs-pdf/i1099msc.pdf should be consulted.
Third most popular questions: Who gets a copy? Answer: When a 1099 is issued, one copy is retained by the payee for their records, one copy is send to the recipient of the payments, and a copy is sent to the IRS for reporting.
Is there an electronic filing requirement? Any filers who have over 250 or more to report are required to file with the IRS electronically.
What is the deadline? The reporting deadline to the IRS is February 28th, however, if the filer is reporting electronically, the deadline is March 31st.
In most cases the payment recipient should receive their copy of the 1099 by January 31st.
There are some exceptions to the recipient due date. Form 1099-B, 1099-S, and payments reported on 1099-MISC for proceeds paid by attorneys and certain payments reported by brokers have until February 15th for the payment recipient copy.
Individuals that receive payment as reported on a 1099 are generally required to report those payments on Form 1040 as income. Business entities may have to report payments as part of their income.
Hope this helped!
Welcome to inTAXicating. My name is Warren Orlans and this is my blog. With over 17-years experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and the rest working in the private sector at large financial institutions responsible for resolving tax issues for corporations and individuals and the Canadian lead for a large US bank on FATCA implementation. My tax career began pretty much out of university at the CRA, in Collections, where I moved up, across, over and up again through their division with stops in Enforcement, Taxpayer Relief (then Fairness), Audit, Directors Liability, Training, Mentoring, GST, GST/HST, Payroll, Corporate Tax, Personal tax, and probably much more. If you have a collections, compliance or audit issue with the CRA, MRQ, IRS or with the CRTC, WSIB or any aspect of those agencies, inTAXicating is the place you need to contact. inTAXicating has entered into a strategic partnership with Goldhar and Associates, to create Goldhar Tax Solutions. This partnership allows my team to include amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. When dealing with governments, knowledge is power. We possess strong understanding of government so we know what the next step is before the government does. When you have a collections problem with the CRA, do you hire a graphic artist? No, you get a former collector who trained the staff, and who worked as a resource officer for 5 years. Then you know you are on the right track to resolving your tax problem(s). Others offer suggestions. We offer solutions! [email protected] View all posts by Warren Orlans
9 thoughts on “1099 Reporting: Explained so a Canadian could understand it.”
I am a dual citizen that lives in Canada full time. I have gotten a 1099 Misc form for renting farmland (in the family passed down) Am I supposed to report on my Canadian return, US or both? Any help would be appreciated. Thanks
If you received a 1099 Misc, then just report it on your US tax return.
Thank you for this info! Its very helpful how you list down in details different types and uses of 1099 form. I just want to share also this site PDFFiller, Inc for those looking for convenient way to fill out their IRS forms. Here is the link where I was able to fill out out the form I need http://goo.gl/ztRCH1. Hope you find it useful.
I am a Canadian resident living in Canada and received a 1099-Div. Is foreign tax paid box 6 different than Federal income tax withheld box 4? In the software program, under foreign income-Dividend tab, there is only a box to report foreign tax paid. The slip only has an amount to report for Federal income tax withheld, shall I place it under the Foreign tax paid box?
Hi Kerri, Sorry for the late reply, but I gather you have addressed this issue by doing it the way you described it, which is acceptable to the CRA (I called). A lot of people just throw out the 10&9DIV’s and ignore them on their tax return, much in the same way those south of the border ignore T5008’s. Slowly, however, we are seeing the CRA and IRS addressing these forms so getting in the habit of including them is very important.
I am a Canadian resident and was issued a 1099c from the irs. This is from an overpayment error the irs made and are now giving up on asking for the money back. I intend to file and claim it on the USA 1040nr but do I also need to claim this on my Canada return. I had some profession income that I earned in the USA and will claim that on both countries tax returns
Thank you for this post – it tell me some of what I need to know, but now I have more questions. I am a Canadian, living in Canada, working in Canada, doing work for a US company and invoicing them (for less than a year so far) and was asked to complete a W8BEN. When it comes tax time in 2017 (for 2016) I am not sure how this income is handled for taxation – do I pay taxes to the IRS and/or to CRA?
Have I given enough information?
Thank you for the question / comment.
The W8BEN, as you might already know is a form which, when completed, is provided to your US income provider (Not the IRS!) in order to prevent 30% of your earnings being withheld and remitted to the IRS.
The W8BEN claims the treaty rate between Canada and the US which means you cannot be taxed by both countries on the same income, and by completing this form, you are certifying the following information to the IRS;
• I am the individual that is the beneficial owner (or am authorized to sign for the individual that is the beneficial owner) of all the income to which this form relates or am using this form to document myself as an individual that is an owner or account holder of a foreign financial institution,
• The person named on line 1 of this form is not a U.S. person
• The income to which this form relates is:
o (a) not effectively connected with the conduct of a trade or business in the United States,
o (b) effectively connected but is not subject to tax under an applicable income tax treaty, or
o (c) the partner’s share of a partnership’s effectively connected income,
• The person named on line 1 of this form is a resident of the treaty country (in this case, Canada) listed on line 9 of the form (if any) within the meaning of the income tax treaty between the United States and that country, and
• For broker transactions or barter exchanges, the beneficial owner is an exempt foreign person as defined in the instructions. Furthermore, I authorize this form to be provided to any withholding agent that has control, receipt, or custody of the income of which I am the beneficial owner or any withholding agent that can disburse or make payments of the income of which I am the beneficial owner.
• You also agree to submit a new form within 30 days if any certification made on this form becomes incorrect (changes).
In a nutshell, you’re telling the IRS, you are NOT a US person, that you do not work in the US and that you will report your income to the CRA.
Otherwise, they keep 30% of it.
Hope this helps!
I previously worked for a US based company but was always resident in Canada and paid Canadian taxes. They had a stock purchase plan with ComputerShare in the US. As part of the plan I was paid dividends and filled out W8BEN forms at various points over the years. However, each year I was issued a 1099-DIV with a line 1a for the dividend and line 4 for tax withheld. I am confused…have I paid US taxes? If not, do I need to?
Separately for my Canadian return, does this get added to line 121 (Interest and other investment income) of my federal return?