1099 Form: What Is It, Requirements and Due Dates

Today’s blended workforce combines non-traditional jobs, such as those filled by freelancers and independent contractors who work for themselves, with traditional 9-to-5 jobs that are filled by full-time employees who work directly for their employers. Today’s lexicon even has a term for these non-traditional jobs – contingent jobs. And in a 2015 study by the U.S. Government Accountability Office, contingent workers made up a staggering 40-percent slice of the national workforce pie. If you earn income from a source other than an employer, you’re among the ranks of these contingent workers. Or you may have unearned income, such as retirement benefits or investment dividends, which is not paid by employers. IRS Forms 1099 provide a record of these non-employer sources of income that you'll report on your tax return. For work as an independent contractor, you will receive IRS Form 1099-NEC.

There’s not one individual 1099 form to report all types of non-employment income. It’s actually a series of forms, also called information returns, which are custom-designed to cover a number of income-reporting categories. Each form begins with the number 1099, followed by a dash and one to four letters. These letters encode the full title of the form such as 1099-DIV, which reports dividend income, and 1099-R, which reports retirement income.

If you receive a 1099 form, it doesn’t automatically imply that you owe any tax on the reported income. For example, Form 1099-LTC (Long Term Care and Accelerated Death Benefits) is the form on which insurance companies must report to the IRS the payments they make to long-term care policyholders. But the payments they make are typically tax-free to their insured claimants.

If you receive income from someone who is not an employer, that person or business must report this income to the IRS on a 1099 form if it’s considered reportable income. Who needs to get a 1099 form (other than the IRS) depends on the requirements of the specific form, so you may or may not receive a 1099 for certain types and amounts of non-employee income. Because a third party reports this type of income to the IRS for you, 1099s essentially help provide income accountability for contingent workers. In the words of the IRS, 1099 forms help “increase voluntary compliance and improve collections."

Payers (or issuers) generate 1099 forms, file them with the IRS (and other entities, if required) and issue them to payees (the recipients of the reported income), if required by the guidelines of the form. The types of payers cover many categories such as retirement plan administrators who pay distributions to plan participants, banks and other lending institutions that make interest payments to accountholders and individuals who pay independent contractors. Payees also cover a diverse spectrum, including sellers, borrowers, beneficiaries and individual freelancers.

Think of a 1099 form as the counterpart of IRS Form W-2 (Wage and Tax Statement). Both forms report income and both forms are considered information returns. But the types of income and the sources of income determine which of these two forms the issuer uses. If you work for an employer, your earned income (including wages, salaries and tips) is documented on a W-2. But if you work for yourself and had earned income, for example, from a client, or if you received unearned income, for example, from your retirement fund, the client and the fund administrator will furnish you with the appropriate 1099 form.

You may also receive a W-2 and a 1099 (or more than one of each), depending on your income source. Your employer will furnish you with a W-2 for the income you earned, and a client may furnish you with a 1099-MISC (Miscellaneous Income) for additional income you earn from your own part-time business. And you may also receive a 1099-INT (Interest Income) from your bank for interest you earned as an account holder.

Fortunately, you won’t have to wade through the sea of available 1099 forms to pick the one that applies to you. It’s up to the payer of a 1099, such as your savings and loan officer, stock broker or retirement plan administrator, to issue the correct form. But even if you’re expecting a 1099 form that never reaches you, you’re still required to disclose any reportable income to the IRS when you file your tax return.

As of 2018, the following list represents currently available 1099 forms and an example of why you may receive each form. (Many of these forms are issued for additional reasons other than the one example given below.)

• ​1099-A​ (Acquisition or Abandonment of Secured Property). You receive property for full or partial satisfaction of a loan you extended, even if you’re not in the lending business.
• ​1099-B​ (Proceeds from Broker and Barter Exchange Transactions). You receive property through a barter exchange.
  
• ​1099-C​ (Cancellation of Debt). You have a debt that’s canceled by a lender, but you must still report the amount of debt as taxable income.
  
• ​1099-CAP​ (Changes in Corporate Control and Capital Structure). You receive cash or stock from a corporation that is acquired by another entity
  
• ​1099-DIV​ (Dividends and Distributions). You receive at least $10 in stock dividends.
  
• ​1099-G​ (Certain Government Payments). You receive a taxable grant.
  
• ​1099-H​ (Health Coverage Tax Credit Advance Payments). As a qualified provider of health insurance coverage, you receive payments in advance for Health Coverage Tax Credit (HCTC) from the Department of the Treasury for qualified recipients.
  
• ​1099-INT​ (Interest Income). You earned taxable interest from Treasury bills or bonds.
  
• ​1099-K​ (Payment Card and Third Party Network Transactions). As a Payment Settlement Entity (PSE), you make payments to settle payment card transactions.
  
• ​1099-LTC​ (Long Term Care and Accelerated Death Benefits). You receive payments for long-term health care from your insurance company.
  
• ​1099-MISC​ (Miscellaneous Income). You receive at least $600 in rental income.
  
• ​1099-OID​ (Original Issue Discount). You profit from a discounted bond price, which has a higher redemption value than you paid for its issue price.
  
• ​1099-PATR​ (Taxable Distributions Received from Cooperatives). You receive $10 or more in patronage dividends from a cooperative.
  
• ​1099-Q​ (Payments from Qualified Education Programs). You receive any payments from a Qualified Education Program (QEP) such as a 529 or Coverdell plan.
  
• ​1099-QA​ (Distributions from ABLE Accounts). You (or your family) receive payments from an Achieving a Better Life Experience (ABLE) savings account.
  
• ​1099-R​ (Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.). You receive payments totaling at least $10 from your annuity.
  
• ​1099-S​ (Proceeds from Real Estate Transactions). You sell your home.
  
• ​1099-SA​ (Distributions from an HSA, Archer MSA, or Medicare Advantage MSA). You receive funds from a Medicare Advantage MSA account as the account holder.
  

The payers of 1099 forms have IRS-imposed deadlines by which they must file 1099s with the IRS and issue 1099s to payees and these dates may be different. For example, although payers typically have until Feb. 28 to file paper 1099s with the IRS, they generally must issue 1099s to payees by Jan. 31. But payers that file their 1099s electronically have until April 1 to file with the IRS. (If any of these dates falls on a weekend or a legal holiday, the deadline is extended to the next business day.)

One notable exception to the e-filing allowance is 1099-QA, which cannot be filed electronically – it must be filed on paper. And a deadline exception is the 1099-MISC, which payers must file with the IRS by Jan. 31, regardless of whether the payer files a paper or digital return, if you have non-employee compensation reported in Box 7.

All 1099 income is taxable income in the eyes of the IRS. There are many instances when the IRS does not place a requirement on a payer of 1099 income to report the income to the IRS or even furnish you a 1099 form, but you're still required to report this income on your tax return. For example, if a client pays you less than $600 during a tax year for your professional services, the client is not required to furnish you a 1099 form, but you're required to include this income on your tax return.

If you don't know whether you should be on the lookout for a 1099 form from a payer, visit IRS.gov and click on the Forms and Instructions tab. Follow the prompts to search for your specific 1099, and review the instructions that accompany the form to determine whether your payer must issue you the form.

Report your 1099 income when you file your Form 1040 or Form 1040A income tax return. Your specific tax situation determines which of these returns you’ll use. If you’re unsure which one you need to file, find them at IRS.gov by clicking on the Forms and Instructions tab and following the prompts. You’ll be able to view, download and print both these tax returns, their instructions and worksheets with this online search.

By using this same IRS internal search feature, you can also access all of the Forms 1099. Since each form has its own unique filing differences, refer to the instructions that accompany the specific 1099 you receive from a payer for more guidance on how to file your return and where you’ll report 1099 income on your return.

In today’s paperless world, taxpayers have a veritable menu of options for electronically filing their tax returns. You may choose to hire a tax professional to file a digital return for you, or you may prefer to purchase tax-preparation software and file your own return online. For a nominal fee, you can also use efile.com, which is an IRS-authorized e-file provider, to file your return online using step-by-step prompts. Efile.com doesn’t yet offer all the 1099 forms, but it does have the ones that are most commonly used such as 1099-MISC, 1099-DIV and 1099-INT.

The IRS offers another online filing option that's free to taxpayers, which is available on the IRS website. If your annual income is less than $66,000, you’ll be able to use free name-brand software for filing your tax return online with the “Free File” option. If your annual income is more than $66,000, you’ll use the “Free File Fillable Forms” option. "Free File" offers a bit more step-by-step guidance for taxpayers, and "Free File Fillable Forms" offers only basic guidance for taxpayers who know how to complete their own tax returns. Visit IRS.gov/freefile and choose either of these options to get started.