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Leading into the Federal Open Market Committee (FOMC) decision, Chair Jerome Powell and many of the regional Federal Reserve (the Fed) bank presidents had unanimously expressed support for a pause in the Fed’s tightening cycle. Even Esther George, from the Federal Reserve Bank of Kansas City, advocated for a patient approach to monetary policy in her speech a few weeks ago.
In a press conference following the conclusion of the FOMC meeting, Powell stuck to the script and emphasized the Fed is waiting patiently to see how the economy evolves. The January statement removed the reference to further gradual increases, scrapped the central bank’s assessment that risks to the economic outlook are roughly balanced (hinting that they are skewing slightly to the downside now), and noted that inflationary pressures are muted. Translation: the Fed is on hold until at least June. The battery of dovish tweaks to the Fed’s guidance was enough to lift U.S. equities in the minutes following the announcement.
The cause for the pause: Downside risks
It’s important to remember that the cause for the pause is most likely about emergent downside risks to both the U.S. and global economic outlook. While the Fed still expects a strong economy in 2019, the recent volatility in financial markets, the slowing in global growth, and sharp declines in measures of U.S. consumer and business confidence have all eroded the central bank’s conviction in that baseline somewhat.
What is a 1099 form? This is a record of payment from an individual or entity, showing a payment, generated for your records. The individual/entity sends a copy to both the payee as well as the I.R.S.1
Who might be sending 1099s? Clients send their freelancers 1099s, recording work performed. Banks send 1099s to reflect interest from a savings account. A state may send a 1099 for a tax refund. If the financial institution who handles your retirement account writes you a check, they will also send you a 1099.1
In any event, a 1099 includes the taxpayer identification number or Social Security Number of the payee. Receiving the 1099 does not automatically mean that the payee owes tax, as there could be situations that offset that income, but it definitely means that the I.R.S. also has a record of that payment.1
There are many types of 1099 form. Here are a few of them:
1099-A. This form is a consequence of foreclosure or bank repossession of secured real property – “acquisition or abandonment,” in I.R.S. terms. Lenders send it to the foreclosed party and the buyer.1
1099-B. Brokers and barter exchanges report proceeds from securities, futures, commodities, or barter exchange transactions with a 1099-B.1
1099-C. The 1099-C reports debt cancellation. You must claim the indicated amount on the 1099-C form as income in the year the debt was forgiven. When you pay income taxes on that amount, the creditor cannot come after the debt again. This form sometimes follows a foreclosure.1
1099-CAP. This one is for those who own shares in a corporation that has been acquired or has undergone a significant change in capital structure. If it was sold or changes have been made where you’ve earned cash or stock, for example, this form would be necessary.1
1099-DIV. When you receive dividends, capital gain distributions, or liquidation distributions, you get one of these. For example, when a mutual fund sells off funds and realizes a capital gain, the fund informs you of your share of the capital gain through a 1099-DIV.1
1099-G. This form reports payments from government agencies and qualified state tuition programs – everything from state and local tax refunds and unemployment benefits to agriculture payments, gambling winnings, and taxable grants. It is usually issued to show unemployment benefits or a state tax refund.1
1099-INT. This form reports interest income of $10 or more, and sometimes other tax items related to interest income (such as federal tax withholding or early withdrawal penalties).1
1099-LTC. As the LTC part hints, these forms report distributions (payments) from long term care insurance contracts and accelerated death benefits paid out as a result of a life insurance contract or a viatical settlement.
1099-MISC. This category includes “miscellaneous income,” including awards and prizes.1
1099-OID. The 1099-OID reports the difference between the stated redemption price of a bond at maturity and the issue price of that bond.1
1099-PATR. This form reports patronage dividends, such as in a farm cooperative.1
1099-Q. Have you been paying for school expenses from a 529 plan or a similar savings plan? Withdrawals will be reported on this form.1
1099-R. The 1099-R reports distributions from all types of retirement, pension, and profit-sharing plans as well as any IRA or annuity contract.1
1099-S. The 1099-S reports gross proceeds from real estate transactions or exchanges.1
1099-SA. This form reports distributions from Health Savings Accounts (HSA), Archer Medical Savings Accounts (Archer MSA), or Medicare Advantage Medical Savings Accounts (MA MSA).1
Questions? Are you thinking you should have received one of these forms? Or maybe sent one of these forms? Be sure to talk with a qualified tax professional or qualified financial professional today; they can help you generate, request, and understand the 1099 forms in question.