What is a 1099 form and how does it work?

If some or all of your income comes from somewhere other than a full-time employer, you may get a 1099 form in the mail as tax-filing season draws near.

So what is a 1099 and how does it work? This guide explains what 1099s are for, who might get one and what the most common types are.

Key takeaways

  • 1099 forms are used to report various types of income to the IRS.
  • 1099 forms are typically filled out by the entity that makes the payments—like small businesses or financial institutions—and mailed to whoever is receiving the payments. 
  • Generally, the entity that makes the payments will also file a corresponding 1099 with the IRS.
  • There are more than 20 types of 1099 tax forms, each applying to a different income source.

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What is a 1099 tax form?

1099 forms belong to a group of tax forms known as information returns. They’re designed to report your received taxable payments to the IRS. 1099s show income you’ve received from any entity that doesn’t act as your full-time employer. 

There are different versions of the 1099 for different types of income. For example, there’s one for money earned while working as an independent contractor and one for interest earned on savings.

Typically, 1099 forms include information like: 

  • A taxpayer’s Social Security number or Taxpayer Identification Number
  • The individual’s legal name and home address
  • How much money the person earned during the reporting period

What is a 1099 form used for?

Businesses file 1099s with the IRS to report payments to nonemployee service providers, independent contractors or freelancers. 

Individual payees also receive a copy, which they may use to report income earned outside of full-time employment. The IRS may use a 1099 to make sure it lines up with the information submitted on other tax forms, like Form 1040—the document taxpayers use to report their personal income tax.

What’s the difference between a W-2 and a 1099?

IRS Form W-2 shows how much salary an employer has paid to an employee over the course of a year as well as how much federal tax has been withheld for things like Social Security and Medicare. A 1099 shows income earned from sources outside of a full-time job. It typically won’t include any tax withholdings.

Who gets a 1099?

Anyone who has earned income outside of full-time employment might get a 1099. However, the type of 1099 they receive may depend on the source of the income and how much they’ve earned.

People who could get a 1099 include: 

  • Freelance or self-employed workers or independent contractors
  • Investors who made money from stock dividends
  • Account holders who earned at least $10 in interest
  • Some prize or award winners
  • Account holders who withdrew money from some retirement plans
  • Individuals who received money from the government, like a state tax refund or unemployment compensation

Types of 1099 tax forms

There are about 20 types of 1099 tax forms used to track income from various sources. Here are some of the most common:

Type of 1099 What it’s used for
Form 1099-B Reporting capital gains or losses after selling stocks, bonds or securities through a broker or reporting transactions completed through a barter exchange
Form 1099-C Reporting the cancellation of debt over $600 by a financial entity like a loan provider
Form 1099-DIV Reporting dividend income earned during a single tax year
Form 1099-G Reporting money received from the government, like a tax credit or unemployment income
Form 1099-INT Reporting interest income of at least $10 from a brokerage firm, investment firm, bank or other financial institution
Form 1099-K Reporting income of at least $600 from third-party payment networks like PayPal or Venmo or credit card processors
Form 1099-MISC Reporting miscellaneous income that doesn’t apply to other 1099 forms, like royalties, rental earnings or awards
Form 1099-NEC Reporting nonemployee compensation, including money paid to an independent contractor or self-employed freelance worker
Form 1099-R Reporting distributions or payouts of at least $10 from certain retirement savings plans, like profit-sharing plans, pensions, individual retirement accounts, annuities and life insurance plans
Form 1099-S Reporting the sale or exchange of real estate or other property, though not all proceeds may be subject to state or federal income tax
Form 1099-SA Reporting distributions from a health savings account or medical savings account


Does a 1099 mean I have to pay taxes?

Generally, earnings recorded on an IRS 1099 form are considered taxable income. But that’s not always the case. If you’re not sure if your income is subject to income tax, it may be a good idea to work with a tax professional to make sure you’re filing correctly.

Can I file my taxes without a 1099?

You may be able to file your income tax return without a 1099. If you’re unsure, it could be a good idea to work with a tax professional.

1099 forms in a nutshell

1099 forms are a type of informational return that businesses, individuals and the IRS use to keep track of income earned outside of full-time employment. You may not receive a 1099 for all income earned from a nonemployment source. But if you’ve made money working a side hustle or taken a distribution from your retirement account, 1099s can streamline the reporting process and help you monitor your income leading up to tax season. 

Understanding how 1099s work is especially important if you’re filing taxes for the first time. If you still have questions about the process, you can check out this guide on how to file taxes and maximize your returns.

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