1099 Form: What It Is, How It Works - NerdWallet (2024)

A 1099 tax form (or more than one) should have landed in your mailbox or inbox sometime in February if you were due to receive one. You need to hang on to it because it can have a big impact on your tax life.

What is a 1099?

A 1099 form is a record that an entity or person other than your employer gave or paid you money. The payer fills out the 1099 and sends copies to you and the IRS. There are several kinds of 1099 forms.

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What is a 1099 form used for?

You use your IRS Form 1099s to figure out how much income you received during the year and what kind of income it was. You'll report that income in different places on your tax return, depending on the type of income.

If you need help estimating how income on a Form 1099 could affect your tax bill, check out our free tax calculator.

Who gets a 1099?

All kinds of people can get a 1099 form for different reasons. For example, freelancers, independent contractors and other gig workers who fill out a W-9 form at the start of a business relationship often get a 1099-NEC from their clients outlining their income earned.

A Form 1099 will have your Social Security number or taxpayer identification number on it, which means the IRS will know you’ve received money — and it will know if you don’t report that income on your tax return.

Do I need a 1099 to file my taxes?

Yes. You'll need your 1099 to accurately report your income on your tax return. Remember that a copy of this form is also sent to the IRS, so you can be sure the agency knows about this income.

However, simply receiving a 1099 tax form doesn’t necessarily mean you owe taxes on that money. You might have deductions that offset the income, or some or all of it might be sheltered based on the characteristics of the asset that generated it.

When should I receive my 1099?

The majority of 1099s for income earned in 2023 were due to the recipient by Jan. 31. If the 1099 due date falls on a weekend, the due date rolls over to the next business day. Certain types of 1099s, such as a 1099-S, were due by Feb. 15.

If you were expecting a 1099 and didn't receive it by mid-February, the IRS suggests contacting the payer as soon as possible. You can also call the IRS' main customer service number for help if you can't get in touch with the entity that owes you a 1099.

Types of 1099 forms

There are several kinds of 1099 tax forms. The IRS also refers to them as "information returns." Here’s a basic rundown of the Form 1099s most likely to cross your path.

1099-A

You might receive one Form 1099-A if your mortgage lender canceled some or all of your mortgage, or you were involved in a short sale of your home. Why? Canceled debt is income in the eyes of the IRS — and it’s generally taxable.

1099-B

Form 1099-B covers income from the sale of several types of securities, as well as some types of bartering that take place via bartering exchanges, typically websites. In that case, the exchange might “1099" you for the income you received. A 1099 isn't usually required if you barter with someone directly, though you may have to report the income.

1099-C

If you persuaded a credit card issuer or another lender to settle your debt for less than you owe, you’re not entirely off the hook. The amount the lender forgives is probably taxable income, and the 1099-C tells all.

1099-CAP

You might receive a 1099-CAP if you hold shares of a corporation that was acquired or underwent a big change in capital structure and you got cash, stock or other property as a result.

1099-DIV

One of the most common flavors of this form, the 1099-DIV reports dividends you received. This doesn’t include dividends on your share account at the credit union. The IRS considers those interest, so they appear on another 1099: the 1099-INT.

1099-G

If you received money from the state, local or federal government — including a tax refund, credit or offset — you might get one of these. If you were on unemployment during the year, you might also have a 1099-G headed your way.

1099-INT

If you earned $10 or more in interest from a bank, brokerage or other financial institution, you’ll receive a 1099-INT.

1099-K

If you received $20,000 or more of business income or payments for goods and services via credit card or a third-party payment system (such as Venmo or Cash App) from more than 200 transactions in 2023, you'll be sent of summary of those payments on a 1099-K.

1099-LTC

If your long-term care insurance paid out benefits during the year, the insurer will probably file a Form 1099-LTC. If you received payments from the accelerated death benefits of a life insurance policy, those are reported on this form, too.

1099-MISC

This is a catch-all for income that doesn’t fit into other 1099 categories, though it does have some specific purposes. Income from prizes and awards are examples.

1099-NEC

In 2020, the IRS reintroduced the 1099-NEC, which companies now use to report money paid to people who did work for them but weren't employees. In other words, if you freelanced, were self-employed or had a side gig, your clients should have sent you a Form 1099-NEC instead of a Form 1099-MISC early in the year.

1099-OID

You might receive Form 1099-OID if you bought bonds, notes or other financial instruments at a discount to the face value or redemption value at maturity. Typically, the instrument must have a maturity of more than one year.

1099-PATR

If you belong to a co-op and received at least $10 in patronage dividends, expect to see Form 1099-PATR in your mailbox.

1099-Q

The 1099-Q reports money that you, your child, or your child's school receive from a 529 plan. Keep in mind, however, that the earnings in a 529 plan are generally not subject to tax when they’re used for qualified education expenses, so for many people, the 1099-Q is just record-keeping.

1099-R

If you got distributions from a pension, retirement plan, profit-sharing program, an IRA or an annuity, you might receive a 1099-R. (Remember, many retirement plans are tax-advantaged, so this form might be simple record-keeping on behalf of the IRS.) If you took a loan from your retirement plan, you might have to treat it as a distribution, which means it might be on this form, too, as well as permanent and total disability payments under life insurance contracts.

1099-S

Anyone responsible for closing a sale or an exchange of real estate furnishes this statement to you, reporting the proceeds. Again, the proceeds from the sale of your house or other real estate aren’t necessarily taxable, so do your homework.

1099-SA

This is the form you’ll receive if you took any distributions from your health savings account, Archer medical savings account or Medicare Advantage. Remember, HSA and Archer distributions generally aren't taxable if you use them to pay for qualified health expenses. So again, for many people, a 1099-SA is simply proof that the money left the account and went to you.

What is a 1099 employee?

The phrase "1099 employee" generally describes a person who, in the eyes of the IRS, is an independent contractor, also called self-employed or a freelancer. People who are considered 1099 workers are generally asked to fill out a W-9 at the start of a new work relationship or contract.

If you get a 1099-NEC from your employer, that's a sign that the company sees you as an independent contractor rather than an employee.

1099 vs. W-2

Both 1099s and W-2s are informational returns that show the income you were paid during the year. If you get one or both of these forms in the mail, you'll need to have them handy when filling out your tax return. The main difference between the two forms boils down to your relationship to the payer.

A 1099 is sent to people, such as independent contractors, who made nonemployment income during the year. On the other hand, a W-2 is given to employees and details annual income or wages and the amount of taxes that were withheld during the year.