Types of 1099 Tax Forms: Each Form Explained

Whether you’re a business owner or an independent contractor, you might feel overwhelmed by paperwork – especially if you're scrambling to do your taxes during tax season. The multitude of types of 1099 tax forms from the Internal Revenue Service (IRS) you may have to manage adds to the complexities of your business's tax compliance.

You may encounter 1099 tax forms for multiple reasons. Examples include hiring (or working as) an independent contractor, earning interest income, or trading stock.

Did you know there are more than 20 types of 1099 tax forms?

This article will explain the purpose of each type of 1099 tax form. You’ll learn about common 1099 tax forms that could be relevant to your business. You’ll also learn which 1099 tax forms you might need for your individual income tax return.

What Are 1099 Tax Forms Used For?

IRS Form 1099 is a series of informational returns the IRS uses to collect information about taxpayers’ earnings for the tax year.

Businesses need to file 1099 tax forms to report the type of payments they made and explain who received the payment as income. The taxpayer receiving the payment should report payments on their return.1099s report income from activities other than working as an employee. Employees receive Form W-2. For example, certain types of 1099 tax forms report dividend income, HSA distributions, and self-employed freelancer fees.

Your business should use the form associated with the type of payment it made.

Since 1099 forms are informational, they can feel unnecessary – especially if you’re a small business owner with no time for extra paperwork. However, the IRS requires businesses to file Form 1099 for payments meeting specific criteria.

You should file 1099 tax forms to submit information about relevant business activities and related payments. 

You might also need to notify the income recipients. For example, if you’re a small business owner, you should issue Form 1099s to the independent contractors you hire. Independent contractors expect their Form 1099 before the end of January.

You should know about the most common types of 1099 tax forms, which we’ll explain below.

We recommend consulting with tax professionals for help with complicated terms and managing common and more obscure IRS forms.

1099 Forms Small Businesses Need to File

While not every business must file a 1099, you should file the appropriate forms for any eligible business activities and payments you've made.

Some of the more common 1099 forms your small business might use include IRS 1099-MISC: Miscellaneous Income to report miscellaneous payments of $600 or more and IRS 1099-NEC: Nonemployee Compensation, for payments to nonemployees, including freelancers. 

1099 Forms for Independent Contractors

The businesses you've worked for throughout the year will send you IRS Form 1099-NEC: Nonemployee Compensation by the end of January. You should collect this form from every eligible business you've worked with during the previous year and use the information provided on the form to prepare and ultimately file your tax return. Sometimes, a business you've worked with might forget to send the form, or they did send it, but there's a mistake. We'll tell you how to overcome those common 1099 challenges later in this article. 

A Detailed Breakdown of the Different Types of 1099 Tax Forms

You might be wondering: Which 1099 form do I need?

Refer to our list of common 1099 tax forms to ensure you use the correct materials. We’ll explain the type of income to report and the types of taxpayers who should receive the form.

1099-B: Proceeds from Broker and Barter Exchange Transactions

IRS Form 1099-B reports income from broker and barter exchange transactions.

This form is generally for income from stock sales. Brokers should issue a Form 1099-B to individuals who sold stock and received cash or other property from a corporation. 

You might receive a Form 1099-B if you buy and sell corporate stock through a brokerage.

Brokers do not need to file Form 1099-B if the recipient is a corporation or a charitable organization. The IRS excludes various other recipients.

Your business may need to file Form 1099-B if it consistently participates in broker activities, such as facilitating third-party sales. Check the IRS Form 1099-B instructions to see if the description fits your business.

You can also consult a tax professional for IRS Form 1099-B guidance and other forms you might need to prepare your tax return. 

1099-C: Cancellation of Debt

IRS Form 1099-C reports debts forgiven by lenders.

For example, if a bank cancels a loan it held with a customer, the bank must file a Form 1099-C with the IRS. The bank should also issue Form 1099-C to the customer. The customer should report the debt forgiveness on their individual income tax return.

Form 1099-C filers include lenders such as credit card companies and finance companies.

Your business may need to file Form 1099-C if it often lends money. You can review the IRS Form 1099-C instructions to check whether your business fits the lender definition.

Lenders should file Form 1099-C if the recipient is an individual, corporation, partnership, estate, trust, or association. Unlike some other 1099 form requirements, there is no exception for issuing the form 1099-C to corporations.

If your bank cancels a loan you owe, you may receive a Form 1099-C. This means you don’t have to pay back the debt!

1099-DIV: Dividends and Distributions

IRS Form 1099-DIV reports income from dividends and distributions. For example, corporations should file Form 1099-DIV to report stockholder dividends.

Did your business issue dividends to stockholders?

You should file a Form 1099-DIV for each individual you paid dividends. However, you don’t need to file Form 1099-DIV if the recipient is a corporation or charitable organization. The IRS lists several other filing exceptions in the Form 1099-DIV instructions.

You may receive a Form 1099-DIV if you own stock in any corporations that issue dividends.

1099-INT: Interest Income

IRS Form 1099-INT reports interest paid for business purposes.

For example, banks send Form 1099-INTs to customers who earn interest on savings accounts. Other examples of interest payments requiring Form 1099-INT include the following:

• Interest from savings and loan associations or credit unions.

• Interest on bank deposits, bonds, notes, and certificates of deposit.

• Interest on U.S. Savings Bonds and Treasury bonds. 

Like other types of 1099 tax forms, Form 1099-INT includes filing exceptions. You don’t need to file Form 1099-INT if the recipient is a corporation or charitable organization.

The IRS Form 1099-INT instructions explain exceptions for other recipients.

Keep in mind: Form 1099-INT is only for business interest payments. Individual taxpayers shouldn’t file Form 1099-INT for personal debts. For example, college graduates who pay interest on student loans do not need to submit Form 1099-INT to report their payments.

1099-MISC: Miscellaneous Income

IRS Form 1099-MISC reports business payments of more than $600 for miscellaneous information and items, including the following:  

• Rent

• Prizes and awards

• Medical and health care payments

1099-MISC form instructions include numerous additional types of payments. You should check the instructions to determine whether your business payments meet the criteria.Like other types of 1099 tax forms, the 1099-MISC is only for business payments. You don’t need to file a Form 1099-MISC to report the rent you paid for your apartment. Also, your business does not need to file Form 1099-MISC if the recipient is a corporation or charitable organization.

We recommend consulting small business tax professionals if you’re unsure whether your business payments meet the 1099-MISC reporting requirements.

1099-NEC: Nonemployee Compensation

IRS Form 1099-NEC reports business payments to nonemployees, including independent contractors, freelancers, and attorneys. 

Your business should file Form 1099-NEC if you’ve hired independent contractors to help with business services. Be sure to send a copy to anyone you’ve paid for services. (Remember, you should issue W-2s – not 1099s – for employee wages.)You do not need to file Form 1099-NEC for corporate recipients unless you paid for legal services from a corporate law practice. You can check the IRS Form 1099-NEC instructions for more information on Form 1099-NEC reporting.

If you’re a freelancer or independent contractor, expect to receive Form 1099-NEC from your clients.

Other Types of 1099 Tax Forms

In addition to the 1099 tax forms we’ve already covered, the IRS has published 1099s for multiple other business payment categories you can use during the calendar year.

The following forms are less common for small businesses. However, your business may need to file one of the less-common 1099 tax forms if you made payments fitting the descriptions below.

Consult with income tax professionals to understand if you should file one of the following types of 1099 tax forms.

Tips on Managing 1099 Forms

Whether you’re planning to file 1099 tax forms for your business or you’re gathering records for your income tax return, you should stay organized throughout the year.

We’ve collected our best practices for managing 1099 tax compliance. 1099 management tips include: 

• Keep detailed business records of your receipts and payments throughout the year.

• Ask independent contractors for their contact information – early.

• Save statements from your savings, brokerage, and investment accounts.

Consult income tax professionals who can help you stay compliant with questions and for guidance.

Didn’t Get Your 1099?

Independent contractors and freelancers should receive their 1099 forms by the end of January. But what happens if you haven't received your 1099s by then?

The first step to obtaining your 1099 forms is contacting the business, payment providers, or issuing agency for a copy. This is the only step most independent contractors and freelancers will have to take. In the less likely event you cannot obtain your 1099 from those sources, the IRS can help.

Call the IRS at 800-829-1040 with the following information for assistance. 

• Payer's name

• Street address of payer

• Payer's phone number

Once the IRS has the necessary information, it will contact the payer on your behalf to request the required form.

Fixing Form 1099 Mistakes

Independent contractors and freelancers need to check their 1099 forms for accuracy and completeness for federal income tax reporting purposes. If you notice errors, such as an incorrect Social Security number or Taxpayer Identification Number, among other mistakes, you should take action immediately.

Contact the business or payer to correct the error on your IRS Form 1099. Optimally, you will catch the issue before they've submitted a copy of this form to the IRS. If they've already submitted these materials to the IRS, they will have to take the steps to file a corrected 1099 form with the IRS.

The business or payer will send you a copy of the corrected 1099 that they submitted to the IRS. 

Partner with Tax Professionals

You know how stressful tax season can be if you're a business owner. You need to gather records, run reports, and complete calculations – all while keeping your business running smoothly.

Form 1099 compliance is critical to promoting a smooth tax return process. You should know the common types of 1099 tax forms and understand the activities that cause a reporting requirement.You don’t have to manage the process alone. Partner with 1-800Accountant, America's leading virtual accounting firm, for help with Form 1099 complexities. Let us support your compliance.

1-800Accountant professionals can answer your questions about taxable income and retirement plans, guide you through forms, and help you maximize your tax deductions.