Understanding the 1099 Form: What it is and How it’s Used
A 1099 form is a tax form used to report income received by a person who is self-employed or operates as an independent contractor. It is similar to a W2, which is used to report income received by employees, but is used for individuals who are not considered employees. Self-employed individuals, independent contractors, and small business owners must file a 1099 form for each person or business they paid $600 or more to during the tax year. The recipient of the income must also report this income on their tax return.
How 1099 Forms Affect Mortgage Applications?
When applying for a mortgage loan, the lender will likely request a copy of the applicant’s 1099 forms as part of the application process in order to verify their income and ensure that they have a steady income history. This form will be used to calculate the applicant’s income along with other itemized deductions and to ensure that the applicant meets the lender’s income requirements. It’s important to note that the lender might request additional documentation and information as well, like bank statement, proof of address etc.
This is a supplementary post to: First-Time Homebuyer’s Guide to Mortgage Approval