Tax Information Reporting - Information Returns

Information Returns

The tax information return most familiar to the greatest number of people is the Form W-2, which reports wages and other forms of compensation paid to employees. There are also many forms used to report non-wage income, and to report transactions that may entitle a taxpayer to take a credit on an individual tax return. These non-wage forms are the Forms 1099 (of which there are 16 types), Forms 1098 (of which there are four types), and Forms 5498 (of which there are three types).

Each information return reports a different type of payment or transaction; some are used for multiple types of transactions. In addition, each information return has its own unique rules on when, what, and the amount to report, making it difficult to track reporting obligations. The complexity that arises in filing large volumes of information returns requires many filers to depend on third party information reporting software.

Form 1099-INT reports interest paid on deposits at financial institutions (and some other types of business interest as well). Form 1099-S reports income from the sale of real estate. Form 1099-R reports payments from pensions, annuities, retirement and profit-sharing plans, IRA accounts, and some forms of insurance. Forms 1099-DIV, 1099-B and 1099-OID report various investment income and transactions. Form 1099-MISC reports a variety of payments including rent, crop insurance proceeds, so-called "golden parachute" payments, royalties, payments for medical treatment, income from fish that are sold for cash, and payments for business services.

Form 1098 reports interest on a mortgage; Form 1098-T reports tuition and other educational expenses; Form 1098-E reports interest on student loans; Form 1098-C reports the value of a vehicle that has been donated to a charitable organization.