Understanding the 1099 Reporting Process

Entities that provide certain kinds of income to reportable vendors must file an information return (Form 1099) with the IRS. The information return shows how much reportable income the vendor earned during the course of the tax year. It also shows how much Backup Withholding or 3402(t) Contract Withholding was taken against a vendor, if applicable. (For more information on this subject, please refer to Backup Withholding and Contract Withholding later in this section.) The 1099 process can also exclude Procurement Card records (records associated with payments paid to vendors through credit cards). These records can be reported by the issuer of the card instead of the person/company that holds the card related to the credit card.

Advantage Financial supports the following types of 1099 forms:

Form	Title	Type of Reportable Income
1099-A	Acquisition or Abandonment of Secured Property	Property acquisition. Form 1099-A is used if you lend money in connection with your trade or business and, in full or partial satisfaction of the debt, you acquire an interest in property that is security for the debt, or you have reason to know that the property has been abandoned.
1099-C	Cancellation of Debt	Debt Cancellation. Form 1099-C is used when a creditor has discharged (canceled or forgiven) a debt you owed, or because an identifiable event has occurred that either is or is deemed to be a discharge of a debt of $600 or more.
1099-G	Certain Government Payments	Certain Government Payments Unemployment compensation, state and local income tax refunds, credits or offsets, agricultural payments, taxable grants, and employment trade adjustment assistance (RTAA).
1099-INT	Interest Income	Interest income
1099-MISC	Miscellaneous Income	Rent or royalty payments Service performed by someone who is not your employee. Prizes and awards Other income payments Medical and healthcare payments Fish purchases paid in cash for resale Cash paid from a notional principal contract to an individual, partnership, or estate. Crop insurance proceeds Payments to attorneys Fishing boat proceeds
1099-NEC	Nonemployee Compensation	Payment for services performed for a trade or business by people not treated as its employee.
1099-R	Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRSs, Insurance Contracts, etc.	Income from distributions (from pensions, annuities, profit-sharing and retirement plans (including tab 457 state and local government plans), IRAs, insurance contracts, etc.) Distributions from profit-sharing or retirement plans, any individual retirement arrangements (IRAs), annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability payments under life insurance contracts, charitable gift annuities, etc. This form is also used for death benefit payments made by employers that are not made as part of a pension, profit-sharing, or retirement plan.
1099-S	Proceeds from Real Estate Transactions	Real estate transactions Sale or exchange of real estate

In Advantage Financial, the Offline 1099 Process reports vendor income to both the IRS and the vendor for the calendar year. It is made up of three stages described further in subsequent sections: