What is a 1099 form, and how do I fill it out?

1 min readLast updated January 30, 2024by Unbiased team

Learn more about what 1099 forms are and why they are necessary for paying independent contractors in accordance with IRS protocols.

Summary 

  • A 1099 form documents different types of payments made by an individual or entity that typically isn't your employer. 

  • There are a number of different 1099 forms that cover various scenarios. 

  • Even if the money you receive isn’t taxable, 1099 forms must be included in annual tax returns. 

  • Companies that issue 1099 forms must do so before January 31 for earnings paid out in the previous year. 

What is a 1099, and what is it used for? 

The freelance and gig economy has seen significant growth in recent years as this way of working has exploded in popularity. However, this influx of self-employed individuals has led to an increased focus on earnings that are taxable and need to be declared. This is where 1099 forms come in. 

A 1099 form is a document that states that a person or entity that is not your employer gave or paid you money.  

Also known as information returns, 1099 forms record and keep track of any income or payments made into your account throughout the fiscal year.  

What are the different types of 1099 forms? 

There is more than just one type of 1099 form – and not all of them are contract or strictly employment-related.  

The most common ones in circulation include:  

  • 1099-NEC – The most common type of 1099 form that deals with non-employee compensation 

  • 1099-INT – Dispatched if you receive more than $10 worth of interest from a bank 

  • 1099-A – When a mortgage lender cancels your mortgage, and there is income to be collected 

  • 1099-B – The result of a sale of securities such as websites traded in bartering exchanges.  

  • 1099-C – When your credit card debt is lowered, and there is income to be collected 

  • 1099-CAP – For ruminating shares in a capital structure  

  • 1099-DIV – To report dividends you have received from an investment  

  • 1099-G – Deals with government-related tax refunds  

  • 1099-K – Dispatched if you receive over $20,000 worth of goods or services via a third-party payment platform such as PayPal or Venmo 

Why did I get a 1099 form? 

If you have received a 1099 form, there could be several reasons why. The most likely reason is that you provided a person or business with a service, and the 1099 form is their way of recording what they owe you for your work.  

If you are already employed and are therefore more familiar with receiving a W-2 (employee income form) from your company, it could be because your company is treating you as a freelance or self-employed worker. Consult with HR to find out if any changes have been made to your contract.  

Do I need a 1099 form to file my taxes? 

Not necessarily. Receiving a 1099 form does not immediately mean that you are required to pay tax on that money - you pay tax if the amount you receive from your self-employed work is $400 or more. 

You may also have tax deductions that offset the total amount outcome, or a portion of it may be sheltered based on the asset characteristics of the sender who dispatched it.  

Regardless, it is important that the IRS is aware you have received a 1099, so make sure to report it on your yearly return anyway.  

When should I receive my 1099? 

The IRS typically requires companies and organizations to send out 1099 forms to contractors before January 31 of the year following the income earned.  

For example, if you provided a freelance service to a company in June 2023, you can expect to receive your 1099 by January 31, 2024. This time frame allows companies enough time to gather all the necessary documents and make sure their information return system is up to scratch.  

What is a 1099 employee? 

A 1099 employee is an independent contractor or freelance worker employed part-time or on consignment by a company. They may be employed to work on a particular job for a limited time period or until a specific service has been fulfilled.  

In many cases, a company will distribute 1099 forms to their independent contractors as a way to officially record their payment as a hired worker who is not technically employed.  

Find a financial advisor 

If you are an independent contractor or have hired one in the past year, learning about 1099 forms is crucial. These invoice-like documents allow freelancers to get paid in a fair and IRS-approved way.  

For more information about 1099 forms and any other financial documents, Unbiased can match you with a professional financial advisor who can advise you of your tax liabilities and provide other expert financial advice.

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Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.