Form 1099

What is an IRS Form 1099?

An IRS Form 1099 is a collection of various tax forms to record different types of payments that an individual may receive from non-employees or entities that are not their employees. These are the payments that can’t be classifieds as wages, salaries, tips, or amounts that aren’t withheld. The people making these payments need to record these and report the details to the IRS.   

What are the Common 1099 Forms Used?

There are various types of 1099 tax forms you can get depending on who you’re getting payments from. The two most common 1099 forms people receive, which are also used for non-investment income, are:

• 1099-NEC: Nonemployee Compensation, used to report nonemployee payments such as compensation to freelancers, independent contractors, and self-employed people.
• 1099-MISC: Miscellaneous Information, used for payments received from rents, royalties, prizes, medical and health care payments, crop insurance proceeds, etc.

The following are the 1099 tax forms used for investment income:

• 1099-B: For reporting sales income from securities transactions;
• 1099-DIV: For reporting dividends that you have received;
• 1099-INT: For reporting interest from banks, brokerage, and other financial institutions;
• 1099-R: For reporting distributions from pension, retirement plan, IRA, annuity, or a profit sharing program. 

Other 1099 Tax Forms

• 1099-A: For reporting canceled debt in the form of a canceled mortgage. IRS records canceled debt as taxable income.
• 1099-C: Reported when a credit card issuer or lender forgives some amount of your debt. This amount is taxable most of the time.
• 1099-CAP: Reported for people holding shares in a corporation that underwent a major event, such as being acquired or changing capital structure.
• 1099-G: For reporting credit, offset, or tax refunds that you may get from the local, state, or federal government or for recording the period of unemployment. 
• 1099-K: A form with a summary of payments when you get a minimum of $600 worth of business income from a client through a credit card or a cash app.
• 1099-LTC: It reports benefits paid out by long-term care insurance or accelerated death benefits of a life insurance policy. 
• 1099-OID: For reporting purchased bonds, notes, and other kinds of financial instruments at a discount to the face value or redemption value at maturity. 
• 1099-Q: Keep a record of the money you or your child receives from a 529 Plan, which is generally non-taxable. 
• 1099-PATR: To record patronage dividends if you belong to a co-op.
• 1099-S: To record the proceeds from sales or exchanges of real estate. 
• 1099-SA: Keep proof if you take any distribution from medical savings, medicare advantage, or your health savings account. 

How Do You Know if You’re Eligible for This Form?

Here are some scenarios where you may need to file a 1099 form:

• When you’ve earned $600 or more in the form of non-employee compensation from a person or a business that’s not your employer, you’ll receive a 1099-NEC.
• If your income from rent or royalties is $600 or more, you’ll receive a 1099-MISC.
• If you paid an independent contractor, a self-employed person, or a freelancer $600 or more in compensation, you can send them a 1099-NEC.

Remember that compensation payments to non-employees worth less than $600 don’t need to be reported in a 1099 form. 

What to Do if You Don’t Get All Your 1099 Forms?

If taxpayers don’t receive the expected 1099 forms for earned income, they may report it under miscellaneous income. Contacting a tax professional for help is best, as the taxpayer must report all taxable income and be careful not to misreport anything. 

All taxpayers must keep a record of tax documents to ensure they keep track of the forms they receive. They can contact the payer and request the missing documents if there's a missing form. 

If there’s a delay in the arrival of the 1099, the taxpayer should still file their tax return in a timely manner.

Sometimes, 1099 forms sent by companies may not arrive timely or at all. The IRS will send you a bill stating the taxes you owe them. 

The bill may also take some time to arrive, and you still have to pay the taxes due since you’re responsible for paying your taxes.

Who is a 1099 Employee?

Freelancers, independent contractors, and self-employed people, generally described as non-employees, are also known as 1099 employees. 

Since they don’t have any employer and work independently with various companies or institutions, their incomes aren’t reported as incomes paid to employees.