In quite stark contrast to the New Zealand tax system, the United States utilises a large number of “end of year” forms to ensure income is accurately disclosed to taxpayers and the IRS.

Whilst New Zealand financial institutions do issue documents such as end of year statements, in the US this is very much a systemic process, with different forms for different types of income.

One of the most common forms to be issued is Form 1099, which we’ll discuss below.

What is a Form 1099

As above, a Form 1099 is an end of year income and tax statement, issued to taxpayers who have earned certain types of income in the USA.

Each institution which is making payments to a person, will issue their own 1099 at the end of the year.

There are multiple versions of this form such as:

1099-INT – for interest

1099-DIV – for dividends

1099-MISC – for contracting income

The list goes on, but this system does have merit in helping taxpayers understand their total income for the year.

What does a 1099 show?

A 1099 will usually show basic figures which are necessary for the preparation of an individuals’ tax return.

This will include total income received during the year, total tax withheld, amongst other information such as income attributable to certain US states. They usually include a guide of how to enter the information into a US tax return.

Who issues a 1099?

A 1099 is issued by a US payor of income.

For example, a bank paying interest, or a company paying a contractor, will issue a 1099 to the recipient of the income.

Two copies of the 1099 are issued, one which is filed with the IRS and one with the recipient. By filing with the IRS, this helps ensure that income reported on tax returns, matches the information held on file by the IRS. This is a fairly effective system to automate the process of identifying underreported income on a US tax return.

Is a 1099 the same as a 1042-S?

In almost all aspects, yes, a 1099 is very similar to a 1042-S. However, a 1042-S is issued to non-US persons, whereas Form 1099 is only for US persons.

Will I receive a 1099?

If you have US income other than wages, then it is possible you’ll receive a 1099 in the new year.

Generally speaking, Form 1099 has a reporting threshold of $600.

This means Form 1099 only needs to be issued by the payor of income, if the amount paid during the year is greater than $600.

If you’ve received income under this amount, you may not receive a 1099, however you will still need to report the income on your tax return.

When will I receive my 1099?

For institutions whom are required to issue 1099s (payors of income), these must be issued to taxpayers no later than 31stJanuary each year.

In practice, in New Zealand we frequently see delays of 6 months or more for our clients to receive their forms, as they are commonly posted by mail, as opposed to emailed.

I have questions, can you help?

Certainly, if you need assistance with any of the above, or seeking US tax advice, reach out to us at info@usatax.nzor 09-242-3445