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

Summary 

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:  

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 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 its independent contractors 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 fairly and in accordance with IRS regulations.  

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.