1099 form Archives

Dear Liz: I have a savings account and a revocable trust money market account with an online bank. They provide the 1099-INT tax form for the savings account as a downloadable file. However, they do not provide a downloadable form for the trust account money market.

They insist that it can only be mailed after Jan. 31 and cannot be downloaded online. When I complained several times, saying that I received trust account tax forms from other financial institutions, I received frivolous answers.

Can you explain what is going on here and what I should do to get my 1099-INT early so I can do my taxes without having to wait for it?

Answer: What’s going on is that the bank and its customer service reps are ignorant of the law.

There’s no requirement that the form be downloadable, but the Internal Revenue Service does require 1099-INT forms to be provided to recipients and to the IRS by Jan. 31, says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. This year, the deadline was actually Feb. 2, since Jan. 31 fell on a weekend.

Since the IRS can levy penalties for late filing, you can be sure the bank has found a way to electronically provide the forms to the tax authorities, even if it can’t be bothered to get them to you.

As you’ve personally experienced, other financial institutions give their customers access to the forms well before the deadline. You can’t personally reform a dysfunctional institution, so consider moving your business to one that provides actual customer service.

Dear Liz: My recently graduated child got a job and he will be given a 1099 tax form for his earnings. I know he will have to file his taxes differently and will need to pay both state and federal income taxes, but will he also make payments toward Social Security? Will these months (and maybe years) go toward his lifetime “credits” of paying into Social Security?

Answer: The company is paying your son as an independent contractor rather than as an employee. That means he will need to file his taxes as someone who is self-employed. So yes, he’ll be paying into Social Security — and he’ll be doing so at twice the rate of employees who receive W2s.

Normally, Social Security and Medicare taxes are split between employees and employers. Both pay 7.65% of the employee’s wages, for a total of 15.3%. Self-employed workers must pay both halves.

Your son won’t have taxes withheld from his earnings, so he’ll likely need to make quarterly estimated tax payments to avoid penalties. A tax pro can help him set up these payments and suggest legitimate expenses he can use to reduce his tax bill.