You're probably used to getting familiar tax forms like your W-2 form from your employer when tax season rolls around each year. But you may receive one or more 1099 tax forms as well, depending on your situation and your type of employment. The Internal Revenue Service requires 1099s for income such as bank account interest, retirement distributions and independent contractor wages.
There are more than 20 types of 1099 tax forms that people might receive in 2022 for the 2021 tax year. Several of them don't often apply to the typical taxpayer. But you might receive a number of more common 1099 tax forms, so you should understand what information they report.
Certain types of income other than your regular salary or employee wages may be reported on Form 1099-MISC for miscellaneous income. You must report this income on your tax return. Some types of income reported on this form include rental income, lottery winnings, nonqualified deferred compensation, fishing boat proceeds, royalties and Section 409A deferrals. The form will also show any taxes withheld in boxes 4 and 16. Box 4 is for federal taxes withheld, while box 16 notes state withholdings.
This 18-box form covered non-employee compensation as well prior to the 2020 tax year. But the IRS has removed the box for nonemployee compensation from Form 1099-MISC, such as earnings received for freelance work. It's issued a different form for that information.
You should receive a copy of Form 1099-MISC for each type of non-salary income for which you meet certain thresholds. These thresholds depend on the type of income. It's $600 or more for forms of income other than royalties, which have a $10 threshold. You must still report the income and pay the required taxes on it even if you don't receive a 1099-MISC because it didn't meet these thresholds.
The IRS has used an older tax form, Form 1099-NEC for nonemployee compensation, since it removed this type of compensation from Form 1099-MISC. There's a lot of information on Form 1099-NEC. Box 1 shows income from sources like gig work and independent contracting positions for which you've met certain conditions. You must have earned at least $600 that tax year, didn't have employee status, received it as an individual or business entity and it must have been earned for work in your trade or line of business.
You can find information about any taxes that were withheld in boxes 4 and 5. You're still liable for taxes for income under the $600 threshold earned from gig work and independent contracting positions, so you should make estimated quarterly payments throughout the year to avoid owing a large amount come tax time.
Read more: Self Employed Tax Classifications
You can receive several 1099 tax forms that the Internal Revenue Service requires for things such as bank account interest, retirement income and independent contractor wages.
You should receive Form 1099-INT for interest income if you earn interest as an investor. This covers income from sources such as savings accounts, bonds and mutual funds. You should be issued this document if the interest you earned was $10 or more. Otherwise, you won't get the form but you still must report the interest on your tax return.
You'll find your interest income in box 1. This form also reports things like any early withdrawal penalties that were due on the account, interest on federal bonds, investment expenses, bond premiums and any tax-exempt interest. If you paid any federal, foreign or state taxes through withholding, you'll find that information on boxes 4, 6 and 17.
You may receive Form 1099-OID for original issue discounts in cases where you invested in bonds and the issue price was less than the actual face value or maturity amount. As with Form 1099-INT, the threshold for interest to receive this form is $10, but you must still report it regardless. The form allows the IRS to account for interest income you receive from holding such a bond over time so that adjustments can be made when you file your taxes.
You'll find the original issue discount and any periodic interest in boxes 1 and 2. The boxes that follow cover early withdrawal penalties, market discounts, acquisition premiums, bond premiums, investment expenses, U.S. Treasury discounts and any tax-exempt OID. You'll also see federal and state taxes withheld in boxes 4 and 14.
The IRS may require a financial institution to send you Form 1099-DIV dividends and distributions if you receive stock dividends or distributions from certain types of investment accounts during the tax year. You won't get this form if the cumulative dividends fall under $10 or when the account is an exempt type like an individual retirement account (IRA) or profit-sharing plan. Reporting this information is important because you'll be liable for taxes at either the capital gains rate or the ordinary income tax rate.
Boxes 1 and 1b show your total ordinary dividends and qualified dividends. Different types of gains such as capital gains distributions, Section 1250 and 1202 gains and collectibles gains follow. The form also shows non-dividend distributions, Section 199A dividends, cash and noncash liquidation dividends and investment expenses, among other items. Withheld taxes are shown in boxes 4 and 16.
Form 1099-DIV excludes distributions from several types of retirement accounts. Information about distributions on such accounts, along with types of passive income, is reported on Form 1099-R. This form addresses distributions from pensions, profit-sharing plans, IRAs, annuities and similar sources. You'll get this form from whoever issued your plan as long as the distribution was at least $10. You must report the information from Form 1099-R, but you may not end up having to pay taxes for certain types of distributions.
This form shows the gross distribution along with the amount that's taxable in boxes 1 and 2. You'll also see boxes for capital gains, distribution codes, employee contribution amounts, percentage of the total contribution and net realized appreciation in the securities held by the employer. You'll find tax withholding information in boxes 4, 14 and 17, along with other boxes dealing with contributions and filing requirements.
You should get Form 1099-G for certain government payments if you receive payments such as unemployment benefits, taxable grants or Department of Agriculture payments. This document is also issued if you received offsets, refunds or credit for local or state income tax, got reemployment trade adjustment assistance payments or had a market gain when repaying a farmer's loan. While some items like unemployment income usually require that you pay income tax on the amounts, other items on this form may not always have to be reported or incur further taxes.
You'll find that unemployment compensation comes first in box 1, followed by the state/local income tax items. Boxes 4 and 11 report withheld taxes.
You might think that you're off the hook for the money if a creditor discharges or forgives a debt you owe, such as a credit card. But forgiven or canceled debt is considered to be income for that tax year in the eyes of the IRS. It can come as a surprise when you receive Form 1099-C for cancellation of a debt. This document usually comes for forgiven debt amounts of $600 or more.
The form shows the date the debt was canceled, the amount discharged along with any interest, a description of the debt and your personal liability for the debt. It also includes the reason for the cancellation (such as bankruptcy, foreclosure or agreement) as well as the fair market value of any property that was involved through foreclosure as part of the transaction. You'll also see contact and tax information about yourself and the creditor.
You may not have to pay taxes if the canceled debt was exempt, such as through bankruptcy. You could meet the IRS criteria for insolvency so you wouldn't have to pay taxes or you'll pay a substantial amount less if you do end up with taxable debt but you don't have the money or other assets available to pay it.
You should receive Form 1099-C along with Form 1099-A, "Acquisition or Abandonment of Secured Property," if you've lost your home to foreclosure due to being unable to pay your mortgage. This 1099 form provides information about the lender's acquisition of your home in this situation. It helps you determine whether a loss or gain has occurred with the transfer or sale.
It can mean that capital gains taxes are due for that year's tax return if the transfer resulted in a gain on your part. But you can often get out of paying these taxes if the gain is a maximum of $250,000 if you're single or $500,000 if you're a married couple filing jointly.
Boxes 1 and 2 cover the date the lender took the property and the principal balance of your mortgage that was outstanding at the time. Other boxes cover the property's fair market value, your liability for the debt and the property's description.
You might take advantage of popular government programs like Medicare and Medicaid if you need long-term care services. There are also long-term insurance plans that issue payments either to you or to care facilities when you need to take advantage of your benefits. You may get to accelerate your benefits if you face a terminal illness. Some of these benefits may be taxable. You should receive Form 1099-LTC for long-term care and accelerated death benefits if they are.
You'll find your policyholder information along with your insurer's details on the left side of your Form 1099-LTC. What follows in the first numbered boxes includes the gross long-term care and accelerated death benefits received along with how they were paid out. You'll also find boxes about whether you received benefits due to a chronic or terminal illness, the date that the condition was certified and whether you had a qualified contract. The insured person's details would also be shown on the form if the person who received the benefit isn't the policyholder.
Form 1099-Q, "Payments From Qualified Education Programs" covers distributions you might receive from educational savings accounts such as Coverdell Education Savings or 529 plans. Information about these transfers appears on this form. It also includes transfers between trustees.
The good news is that you won't face taxes or have to report the money as long as the transfers were properly done and the funds were used for qualified educational costs. But you can incur taxes otherwise, especially if a non-eligible person ended up as the beneficiary.
You'll find the gross distribution and earnings in boxes 1 and 2 and the basis in box 3. Other details include classifying the type of account, stating whether a trustee-to-trustee transfer was made, and marking whether someone other than the named beneficiary used the money.
The IRS Gets Copies, Too
Keep in mind that you're not the only one receiving these 1099s. The IRS receives Copy A of each form. Your state tax agency receives Copy 1. You get copies 1 and B. The form is distributed to everyone concerned so everyone knows that a transaction has taken place and that taxes may be owed.
- IRS: Form 1099-MISC
- IRS: Form 1099-NEC
- IRS: Form 1099-INT
- IRS: Form 1099-OID, Original Issue Discount
- IRS: Form 1099-DIV
- IRS: Form 1099-R
- IRS: Form 1099-G
- Intuit Turbotax: What Is a 1099-G Tax Form?
- IRS: Form 1099-C
- IRS: Acquisition or Abandonment of Secured Property
- IRS: Form 1099-LTC
- TaxSlayer: Form 1099-Q - Payments from Qualified Education Programs
- IRS: Instructions for Form 1099-MISC AND 1099-NEC (01/2022)
- IRS: Topic No. 701 Sale of Your Home
- IRS: Topic No. 431 Canceled Debt - Is It Taxable or Not?
- IRS: Topic No. 409 Capital Gains and Losses
- Centers for Medicare and Medicaid Services: Fact Sheet
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.