Understanding Information Returns

An Information Return is a tax form used to report to the federal government, non-payroll related payments made from a business, agency or person to another person or company. You also must furnish copies of the information returns to recipients for payments reported. Failure to file the information returns by specified due dates could result in huge penalties. This also applies to not providing copies of the forms to designated recipients. The IRS can increase penalties for failing to file or provide them all together.

The IRS requires an employer who has 250 or more information returns to file, to e-file them using the IRS FIRE System.

Form 1097-BTC, Bond Tax Credit

This form is used to report issuers or agents of certain tax credit bonds and recipients of Form 1097-BTC from the bond issuer or agent, such as mutual funds or partnerships, who are further distributing the credit. A form must be filed for each tax credit distributed from the following tax credit bonds:

  • Qualified energy conservation bonds.
  • New clean renewable energy bonds.
  • Qualified zone academy bonds.
  • Clean renewable energy bonds.
  • Build America bonds (Tax Credit).
  • Qualified school construction bonds.

Click here for more information from the IRS about Form 1097-BTC.

 Form 1098, Mortgage Interest Statement

This form is used to report mortgage interest of $600 or more received by you during the year in the course of your trade or business from an individual, including a sole proprietor.

Click here for more information from the IRS about Form 1097.

Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

This form is used to report a donee organization who made contributions of a qualified vehicle that has a claimed value of more than $500. A qualified vehicle is:

  • any motor vehicle manufactured primarily for use on public streets, roads, and highways;
  • a boat; or
  • an airplane.

Click here for more information from the IRS about Form 1098-C.

Form 1098-E, Student Loan Interest Statement

This form is used to report student loan interest received of $600 or more from an individual during the year in the course of your trade or business. This includes financial institutions, governmental units (or any of its subsidiary agencies), educational institutions, or any other person who receives student loan interest of $600 or more from an individual during the year.

The $600 threshold applies to each borrower regardless of the number of student loans obtained by that borrower. However, you may file a separate Form 1098-E for each student loan of the borrower, or you may file one Form 1098-E for the interest from all student loans of the borrower.

If more than one person has a connection with the loan, only the first person to receive the interest payment must file Form 1098-E. For example, a loan service or collection agent receiving payments on behalf of the lender must file.

Qualified student loan. To be reportable for 2017, a student loan must be either:

  • Subsidized, guaranteed, financed, or otherwise treated as a student loan under a program of the federal, state, or local government, or of a postsecondary educational institution; or
  • Certified by the borrower as a student loan incurred solely to pay qualified higher education expenses. You may use Form W-9S to obtain the certification.

Click here for more information from the IRS about Form 1098-E.

Form 1098-T, Tuition Statement

This form is used to report an eligible educational institution where a student was enrolled and for whom a reportable transaction is made. An eligible educational institution that is a governmental unit, or an agency or instrumentality of a governmental unit, is subject to the reporting requirements of Form 1098-T. A designated officer or employee of the governmental entity must satisfy the reporting requirements of Form 1098-T.

You are also required to file a Form 1098-T if:

  • You receive or collect payments of qualified tuition and related expenses on someone else’s behalf.
  • The person collecting on your behalf does not possess the information necessary to comply with the reporting requirements of Form 1098-T, then you must satisfy the reporting requirements of Form 1098-T.
  • You are an insurer engaged in a trade or business of making refunds or reimbursements of qualified tuition and related expenses.

Click here for more information from the IRS about Form 1098-T

Form 1098-Q, Qualifying Longevity Annuity Contract Information

This form is used to report any contracts issued that is intended to be a qualifying longevity annuity contract (QLAC).

A QLAC is an annuity contract that an insurance company sells an employee under any plan, annuity, or account described in section 401(a), 403(a), 403(b), or 408 (other than a Roth IRA) or eligible governmental plan under section 457(b). In accordance with the rules of application of paragraph (d) of Regulations section 1.401(a)(9)-6, Q&A-17 (Q&A-17), it must satisfy each of the following requirements:

  • Premiums for the contract satisfy the requirements of paragraph (b) of Q&A-17.
  • Distributions must commence no later than the first day of the month after the employee’s 85th birthday.
  • The contract provides that, after distributions under the contract begin, those distributions must satisfy the requirements of 1.401(a)(9)-6 (other than the requirement that annuity payments commence on or before the required beginning date).
  • The contract does not make available any commutation benefit, cash surrender right, or other similar feature.
  • No benefits are provided under the contract after the death of the employee other than the benefits described in Q&A-17(c).
  • Issued contracts (or a rider or endorsement with respect to that contract) states that the contract intends to be a QLAC.
  • The contract is not a variable contract under section 817, an indexed contract, or similar contract, except to the extent provided by the Commissioner.

An employee includes the owner of an IRA (other than a Roth IRA), where applicable.

Click here for more information from the IRS about Form 1098-Q.

Form 3921, Exercise of an Incentive Stock Option Under Section 422(b)

This form is used by a corporation to report a transfer of stock to any person who exercised an incentive stock option described in section 422(b).

Click here for more information from the IRS about Form 3921.

Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan under Section 423(c)

This form is used for a corporation to report a transfer of the legal title of a share of stock. The employee must acquire the stock pursuant to the employee’s exercise of an option granted under an employee stock purchase plan. It must also be described in section 423(c) (where the exercise price is less than 100% of the value of the stock on the date of grant or is not fixed or determinable on the date of grant).

Click here for more information from the IRS about Form 3922.

Form 5498, IRA Contribution Information

This form is used to report for each person for whom you maintained any individual retirement arrangement (IRA), including a deemed IRA under section 408(q).

Click here for more information from the IRS about Form 5498.

Form 5498-ESA, Coverdell ESA Contribution Information

This form is used to report for each person for whom you maintained any Coverdell education savings account (ESA).

A Coverdell ESA is a trust or custodial account created or organized in the United States. This trust is exclusively for the purpose of paying the qualified education expenses of an individual who is the designated beneficiary of the trust or custodial account. You must designate the account at the time of creation as a Coverdell ESA. If not, you must treat and organize it as a Coverdell ESA for tax purposes. The governing instrument creating the trust must meet the requirements of section 530(b)(1).

Click here for more information from the IRS about Form 5498-ESA.

Form 5498-SA, HAS, Archer MSA, or Medicare Advantage MSA Information

This form is used to report whom you maintained an HSA, Archer MSA, or MA MSA if you were a trustee or custodian of:
  • a Health Savings Account (HSA),
  • Archer Medical Savings Account (Archer MSA), or
  • Medicare Advantage MSA (MA MSA)

The IRS requires a separate form for each type of plan.

Click here for more information from the IRS about Form 5498-SA.

Form W-2G, Certain Gambling Winnings

This form is used to report gambling winnings and any federal income tax withheld on those winnings. The requirements for reporting and withholding depend on:

  • the type of gambling,
  • the amount of the gambling winnings, and
  • generally the ratio of the winnings to the wager.

Click here for more information from the IRS about Form W-2G.

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