Sign In

1099 Income

Three Major Types of 1099 Income 

  • 1099 MISC - Issued for (among other things) payments received for services performed in a trade or business by people not treated as employees.
  • 1099 DIV - Issued to individuals who receive dividend income and other income such as passed through capital gains distributions.
  • 1099 Interest - Issued to individuals who receive interest income. 

 

1099 MISC

Form 1099 MISC is issued for (among other things) payments received for services performed in a trade or business by people not treated as employees. As such, these individuals are classified for Federal (and Philadelphia tax) purposes as self-employed individuals. Individuals who conduct their business or trade (i.e. physically perform their business services or activity) within the City of Philadelphia will be subject to the Business Income and Receipts Tax (“BIRT”), the Net Profits Tax (“NPT”) and be required to obtain the Commercial Activity License (“CAL”). This is true despite the lack of a physical office or location within the City of Philadelphia and is applicable to both residents and nonresidents of Philadelphia. Philadelphia residents who maintain no office or physical location within the City and who do not engage in any business activity within Philadelphia will not be required to procure the CAL and will not be subject to the BIRT. However, these resident individuals will be required to file and pay the NPT by virtue of their status as Philadelphia residents.

1099 DIV

Form 1099 DIV is issued to individuals who receive dividend income and other income such as passed through capital gains distributions. A Philadelphia resident who receives dividend income from common stocks, mutual funds or other investment-type companies will be required to file and pay a School Income Tax (“SIT”) return. Philadelphia residents who are recipients of Form 1099 DIV should consult the SIT Regulations to ascertain whether the type/source of dividend received is subject to the SIT. For example, dividends paid by a National Bank to holders of common stock are not subject to the SIT.

1099 Interest

Form 1099 Interest is issued to individuals who receive interest income. A Philadelphia resident who receives interest income from corporate bonds, mutual funds or other investment-type companies will be required to file and pay a School Income Tax (“SIT”) return. Philadelphia residents who are recipients of Form 1099 Interest should consult the SIT Regulations to ascertain whether the source of the dividend received is subject to the SIT. For example, interest from a corporate bond or bond mutual fund is subject to the SIT whereas interest from a bank Certificate of Deposit (“CD”), direct obligation of the U.S. Treasury, or a municipal bond issued by a political subdivision of Pennsylvania are not subject to the SIT.