1099 Form

What Is a 1099 Form?

A 1099 form is part of a series of tax documents used to report payments made to non-employees (i.e., independent contractors, freelancers, or sole proprietors). A copy must be provided to the Internal Revenue Service (IRS) and the payee, who must then report that income when they do their own taxes. This way, the IRS knows if there’s a discrepancy between the reported income on a tax return and the total income a person actually received.

W-2 vs. 1099

A W-2, also called a Wage and Tax Statement, is used to report payments to traditional employees. Employers are required by the IRS to use W-2 forms to report earnings, withholdings, and other benefits paid to each employee during the previous tax year. Some of the details found on a W-2 include:

• Total wages, tips, and salary paid
• Retirement plan contributions
• Total state and federal taxes withheld
• Medicare and social security

If you’re wondering whether to use a W-2 vs. 1099 form, consider whether you do any of the following for the individual providing services:

• You control how the worker performs the job (i.e., where and when they work, equipment and methods used, etc.).
• You control how and when the worker is paid.
• You provide benefits, PTO, and the expectation of an indefinite term of employment.

If you do, they likely should be classified as an employee and you must use a W-2 to report their earnings.

What Is a 1099 Form Used for?

1099 forms are used to report various types of income outside of payments made to traditional employees, such as interest from a bank, investment dividends, or compensation for freelance work. While there are more than a dozen different 1099 forms, most taxpayers only need to worry about the following:

• 1099-NEC: This Non-Employee Compensation form is used to report income subject to self-employment tax (i.e., income paid to independent contractors).
• 1099-DIV: This form is used if a person received over $10 in distributions from stock or other securities, including dividends, capital gains distributions, and nontaxable distributions.
• 1099-INT: The Interest Income form is sent by a financial institution if an individual has earned at least $10 in interest in a year.
• 1099-B: This form reports the proceeds from broker and barter exchanges, such as stocks, commodities, and securities.
• 1099-C: The Cancellation of Debt form is required if a credit card issuer or other lender settles $600 or more in debt.
• 1099-G: This IRS form reports state and local income tax refunds, unemployment compensation, agricultural payments, and taxable grants.
• 1099-R: This tax form is used to report distributions from retirement or profit-sharing plans, like IRAs, pensions, annuities, or 401(k)s. If a loan was taken from a retirement plan, this may also count as a reportable distribution.
• 1099-SA: This tax form identifies distributions taken from a health savings account (HSA), Medicare Advantage medical savings account (MA MSA), or Archer medical savings account (Archer MSA).
• 1099-MISC: This form is for any professional services rendered outside an employer that earned $600 or more in a year. It’s also a catch-all for income that doesn’t fit into other 1099 categories, such as royalties, prizes, or awards.

Who Gets a 1099 Form?

Only taxpayers who receive income other than wages, salaries, or tips reported on a W-2 will get a 1099 form. The type of 1099 sent depends on the payment issued. For instance, if you’ve made payments to an independent contractor for their freelance services during a given tax year, you’ll need to file a 1099-NEC form for that tax year.

The deadlines to submit 1099 forms to the IRS and the individual vary, depending on the form type and whether you file electronically. While some exceptions apply, there is a failure-to-file penalty if you don’t submit the correct information by the specified due dates. (See 2023 IRS instructions for more information.)

Can I Print My Own 1099 Forms?

If you need to issue a 1099 form, you can't print them yourself. Here are four primary ways to get 1099 forms:

1. You can order them from the IRS.
2. Get physical, blank forms from an office supply store.
3. Use a third-party online service to create 1099s for you.
4. Use third-party tax prep software for businesses.

To submit paper 1099s to the IRS, you must also include Form 1096.

1099 Form 2023

Beginning in the 2023 tax year, you can e-file 1099 forms via an online portal on the IRS website. Known as the Information Returns Intake System (IRIS), this electronic service may be especially helpful for small businesses required to submit 1099 paper forms to the IRS.

Using the online portal, you can securely upload, create, and edit information. It also allows you to download your completed 1099 forms for distribution. The system retains issuer information and lets you know if your tax forms are missing key information.