What Is a 1099 Tax Form?

There are many reasons why you might require a 1099 form this year, whether you're a contractor, a new business owner, or an established small business. If this is your first time or you haven't needed this form in a while, use this blog to learn about what a Form 1099 is, its utility, your responsibilities, and more.    

The Purpose of a 1099 Tax Form

An IRS Form 1099 serves two distinct purposes:

1. To document money spent or disbursed by businesses or individuals
2. To document money received by businesses or individuals

The purpose of a 1099 for your tax situation depends on whether you’re the business that paid the money or the contract worker who received the cash documented on the form. 

Who Fills Out a 1099?

If your business has used workers who aren't salaried, it is your responsibility to obtain, complete, and distribute the proper Form 1099 to those contractors. This form can be obtained from the IRS.

As long as you’re the contractor receiving funds, you don’t have to complete a 1099 — you just have to wait for yours to be issued to you. 

Who Receives a 1099?

If you performed non-salaried work for a business or other entity, you will receive a 1099 in January.

Other reasons why you might receive a 1099 include the following:

• You sold a product or service to an individual or business that does not employ you
• Your mortgage lender canceled some (or all) of your home loan 
• You sold or bought stocks, bonds, shares, or other securities

It’s important to note that just because someone sent you a 1099 doesn’t mean that the money they’re documenting is income you’ll have to pay taxes on when you file your return. 

16 Types of 1099 Forms

Not sure which type of 1099 you need to issue? While certain 1099s are more common than others, you will use one of the following forms depending on the nature of your work or business. 

1. 1099-A – Funds canceled in a mortgage loan
2. 1099-B – Proceeds from securities sales and bartering
3. 1099-C – Canceled or settled credit card debt
4. 1099-CAP – Profits made on corporate shares
5. 1099-DIV – Dividends received on savings or brokerage accounts
6. 1099-G – Money received from a government program (like unemployment)
7. 1099-INT – Interest earned in any kind of financial account
8. 1099-K – Money received via credit card or a payment platform (like Paypal)
9. 1099-MISC – Catch-all funds that don’t fit into other 1099 form categories
10. 1099-NEC – Money earned from someone who isn’t your employer
11. 1099-OID – Money spent on securities sold at a discount from their face value
12. 1099-PATR – Patronage dividends from a co-op
13. 1099-Q – Funds disbursed from a prepaid college plan
14. 1099-R – Distributions from a retirement account
15. 1099-S – Proceeds from a real estate transaction
16. 1099-SA – Money taken out of your HSA

How to Use a 1099 to File Your Tax Return

If you send a 1099 form to someone else, you don’t need to include this document in your tax return. But you do have to send it to the IRS by the deadline for the 2022 tax year, which is February 15, 2023.

If you receive a 1099, and the money it’s documenting is taxable income, you must include information from the 1099 on your IRS form 1040.

Follow these simple instructions for common Form 1099-NEC:

1. On form 1099-NEC, locate box 1; this is the amount you received from the payer.
2. Since form 1099-NEC documents money you received as a non-employee, you could either list it in line 3 (business income) or line 8z (other income) of Form 1040, Schedule 1.
3. Add the amount from box 1 on form 1099-NEC to your chosen line on Form 1040, Schedule 1. 

On Form 1040, Schedule 1, you should find a line that corresponds to each type of 1099 form — for example, if you receive a 1099-C (because you settled credit card debt), you can enter the amount in box 1 of the 1099-C in line 8c (cancellation of debt).  

Frequently Asked Questions About IRS Form 1099

What Should I Do if There’s a Mistake on My 1099?

If there’s a mistake on your 1099, you have a few options:

• Contact the payer – If the payer made a mistake, reach out to them. They can send you a corrected version when filing your tax return. 

• Contact the IRS – If you don’t receive a 1099 (or a corrected one) by the end of February, contact the IRS. The IRS will contact the payer on your behalf and provide instructions on filing your tax return if you don’t receive your 1099 or corrected form by the tax filing deadline. 

What’s the Difference Between a 1099 and a W-2?

Businesses issue W-2s to employees whose income tax they withhold from their paychecks. After withholding these funds, businesses pay them to the IRS on their employees’ behalf. 

If you receive a 1099, however, no one withheld any taxes from your payment; the form tells you the amount of income that could be taxable. 

Do I Need a 1099?

Each 1099 form has its own requirements. For example, you only need to complete a 1099-NEC for an individual to whom you paid more than $600. But, if you’re a financial institution, you need to send an individual a 1099-INT if they made at least $10 in interest on their account. 

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