Glossary

IRS Form 1099: Miscellaneous Income

IRS Form 1099 is used to report various types of non-wage income, such as interest, dividends, capital gains, and self-employment earnings. There are several types of Form 1099, depending on the source of the income:

1099-INT: Reports interest income.
1099-DIV: Reports dividend income.
1099-MISC: Reports miscellaneous income, such as payments to independent contractors or freelancers.

The IRS requires businesses, financial institutions, and other entities to issue Form 1099 to taxpayers who receive more than $600 in certain types of income during the tax year. Taxpayers must report the income listed on their 1099 forms on their annual tax return.

Receiving Form 1099 is important because it signals to the IRS that the taxpayer earned income that may not have been subject to withholding, and failing to report this income can result in penalties and interest.

Recommendation

Tax Transcript

A tax transcript is a document that summarizes key information from a taxpayer’s return, used for financial aid, mortgage loans, or income verification.

CP28 Notice

The CP28 notice informs taxpayers that their account has been credited with an adjustment, which may impact their balance or refund status.

Back Taxes

Back taxes are unpaid taxes from previous years, and failure to pay them can result in penalties, interest, and collection actions by the IRS.

CP521 Notice: Reminder of Installment Agreement Payment Due

The IRS CP521 Notice serves as a reminder to taxpayers that their next installment agreement payment is due and outlines the steps for making the payment.

CP58A Notice

The CP58A notice follows up on the eligibility for the Earned Income Credit (EIC), providing additional information or reminders for taxpayers.

Letter 1615: Notice of Tax Lien Release

IRS Letter 1615 notifies taxpayers that the federal tax lien on their property has been released following the full payment or resolution of their tax debt.

Underpayment Penalty

The IRS underpayment penalty is imposed when taxpayers fail to pay enough estimated taxes or withholdings during the year, leading to fines and interest.

Letter 3850: Notice of Lien Determination

IRS Letter 3850 notifies taxpayers of a tax lien determination on their property due to unresolved tax debt, providing options for release.

IRS Form 8379: Injured Spouse Allocation

IRS Form 8379 is used by an injured spouse to reclaim their share of a joint tax refund if it was applied to their spouse’s tax debt.

Treasury Offset Program (TOP)

The Treasury Offset Program (TOP) allows the IRS to apply a taxpayer’s refund toward unpaid federal or state debts, such as back taxes or student loans.