When tax season rolls around each year, you're probably used to getting familiar tax forms like your W-2 form from your employer. However, depending on your situation and type of employment, 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.
While there are around 20 types of 1099 tax forms that people might receive in 2020, several of them often don't apply to the typical taxpayer. But there are a number of common 1099 tax forms you might receive, so you need to know what information they report.
1. Form 1099-MISC
If you earn certain types of income besides your regular salary or employer wages, then this may be reported on Form 1099, Miscellaneous Income so that you can note this income when you file your taxes. 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 15.
Prior to the 2020 tax year, this 17-box form covered non-employee compensation alongside the other items. However, there's a major change, as the IRS has removed the box for nonemployee compensation, such as earnings received for freelance work, and issued a different form with that information.
You should receive a copy of Form 1099-MISC for each type of non-salary income for which you meet certain thresholds, depending on the type of income. For example, the threshold is at least $600 for forms of income besides royalties, which instead have a $10 threshold. Even if you don't receive a 1099-MISC, know that you still need to report the income and pay the required taxes on it.
2. Form 1099-NEC
Since it removed the nonemployee compensation box from Form 1099-MISC, the IRS has started using an older tax form for 2020 called Form 1099-NEC, Nonemployee Compensation. There is a lot of information on your 1099-NEC. Box 1 of this form will show income from sources like gig work and independent contracting positions for which you met certain conditions. For example, you must have earned at least $600 that tax year, didn't have employee status, received as an individual or business entity and earned for work in your trade or line of business.
You can find information about any withheld taxes on boxes 4 and 5 alongside information about each payer and yourself. You're still liable for taxes, even for gig work and independent contracting positions under the $600 threshold and should make quarterly payments throughout the year to avoid owing a large amount come tax time.
Read More: Self Employed Tax Classifications
Depending on your situation and type of employment, 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.
3. Form 1099-INT
If you earn interest income as an investor, then you should receive Form 1099-INT, Interest Income. This covers income from sources like savings accounts, bonds and mutual funds. You should get issued this document as long as the interest earned was $10 or more. Otherwise, you won't get the form but still must report the interest.
Along with the payer and payee details, you'll find your interest income on box 1. This form also reports things like any early withdrawal penalty 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, you'll find that information on boxes 4, 6 and 17.
4. Form 1099-OID
In cases where you invest in bonds where the issue price was less than the actual face value or maturity amount, then you may receive Form 1099-OID, Original Issue Discount. Like with Form 1099-INT, the threshold for interest to receive this form is $10, but you still need to report it regardless. This form allows the IRS to account for interest income you get 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 on 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 on boxes 4 and 14.
5. Form 1099-DIV
If you get stock dividends or receive distributions from certain types of investment accounts during the tax year, then the IRS may require the financial institution to send you Form 1099-DIV, Dividends and Distributions. Situations where you won't get this form, include when the cumulative dividends fall under $10 or when the account falls under an exempt type like an individual retirement account (IRA) or profit-sharing plan. Reporting this information is important since you'll be liable for taxes at either the capital gains rate or ordinary income tax rate.
Boxes 1 and 1b show your total ordinary dividends and qualified dividends, while 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 on boxes 4 and 15.
6. Form 1099-R
While 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. While you need to report the information from Form 1099-R, 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. Alongside other boxes dealing with contributions and filing requirements, you'll find tax withholding information on boxes 4, 14 and 17.
7. Form 1099-G
If you receive payments from the government, such as unemployment benefits, taxable grants or Department of Agriculture payments, then you should receive Form 1099-G, Certain Government Payments. This document also arrives 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 you to pay income taxes, other items on this form may not always need reported or incur further taxes.
When reading your Form 1099-G, you'll find that unemployment compensation comes first in box 1 followed by the state/local income tax items. Alongside boxes for the other government payments, you'll find boxes 4 and 11 that report withheld taxes.
8. Form 1099-C
Whenever you have a creditor discharge some debt, such as a credit card, you might think that you're off the hook for the money and won't have to worry about it anymore. You might also not realize that such forgiven or canceled debt is considered to be income for that tax year in the eyes of the IRS. So, it can come as a surprise when you receive Form 1099-C, Cancellation of Debt. This document usually comes for forgiven debt amounts of $600 or more.
This 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.
When reporting canceled debt from this form, know that you may not have to pay taxes if the debt canceled was exempt, such as through bankruptcy. If you do end up with taxable debt, but don't have the money or other assets available to pay it, you could meet the IRS criteria for insolvency and not need to pay those taxes or pay a substantial amount less.
9. Form 1099-A
If you've lost your home to foreclosure due to being unable to pay your mortgage, then you should receive Form 1099-C along with Form 1099-A, Acquisition or Abandonment of Secured Property. This 1099 form provides information about the lender's acquisition of your home in this situation and helps you determine whether a loss or gain has occurred with the transfer or sale.
If the transfer resulted in a gain on your part, this can mean capital gains taxes due for that year's tax return. However, you can get out of paying these taxes on your home as long as the gain is a maximum of $250,000 for someone filing as single and $500,000 for a married couple filing jointly.
When checking your Form 1099-A, you'll find tax and contact information for the lender as well as you, the borrower. Boxes 1 and 2 cover the date the lender took the property and the principal outstanding at the time. Other boxes cover the property's fair market value, your liability for the debt and the property's description.
10. Form 1099-LTC
When you need to receive long-term care services, you might take advantage of popular government programs like Medicare and Medicaid. However, there are also long-term insurance plans that issue payments either to you or care facilities when you need to take advantage of your benefits, and you may get to accelerate your benefits if you face a terminal illness where you won't live much longer. In cases where you use such a plan for long-term care, some of these benefits may be taxable, so you should receive Form 1099-LTC, Long-Term Care and Accelerated Death Benefits.
You'll find your policyholder information along with your insurer's details on 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 those were paid out. You'll also find boxes about whether you received benefits due to a chronic or terminal illness, the date that condition got certified and whether you had a qualified contract. If the person who got the benefits differs from the policyholder, then the insured person's details would also be shown on the form.
11. Form 1099-Q
If you've received distributions from educational savings accounts like Coverdell Education Savings or 529 plans, then information about these transfers appears on Form 1099-Q, Payments From Qualified Education Programs. This form will also include transfers between trustees. The good news is that you won't have to face taxes or report the money as long as the transfers were properly done and the funds used for qualified educational costs. Otherwise, you can incur taxes, especially if a non-eligible person ended up as the beneficiary.
Your Form 1099-Q lists information for the recipient and payer. 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.
- Investopedia: 10 Things You Should Know About 1099s
- Internal Revenue Service: Form 1099-MISC
- Internal Revenue Service: Instructions for Forms 1099-MISC and 1099-NEC
- Internal Revenue Service: Form 1099-NEC
- Internal Revenue Service: Form 1099-INT
- Internal Revenue Service: Form 1099-OID, Original Issue Discount
- Internal Revenue Service: Form 1099-DIV
- Investopedia: Form 1099-DIV: Dividends and Distributions
- Internal Revenue Service: Form 1099-R
- Internal Revenue Service: Form 1099-G
- Intuit Turbotax: What Is a 1099-G Tax Form?
- Internal Revenue Service: Form 1099-C
- Credit.com: 1099-C Cancellation of Debt—the Most Hated Tax Form
- Internal Revenue Service: Acquisition or Abandonment of Secured Property
- Investopedia: Form 1099-A
- Internal Revenue Service: Form 1099-LTC
- Investopedia: Form 1099-LTC
- TaxSlayer: Form 1099-Q - Payments from Qualified Education Programs
- Internal Revenue Service. "About W-2, Wage and Tax Statement." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form W-4, Employee's Withholding Certificate." Accessed Oct. 19, 2020.
- Internal Revenue Service. "FAQs on the 2020 Form W-4." Accessed Oct. 19, 2020.
- Internal Revenue Service. "Instructions for Forms 1099-MISC, Miscellaneous Income." Accessed Oct. 19, 2020.
- Internal Revenue Service. "Instructions for Form 1099-DIV (2020)." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form 1099-INT, Interest Income." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form 1099-G, Certain Government Payments." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc." Accessed Oct. 19, 2020.
- Internal Revenue Service. "Forms and Associated Taxes for Independent Contractors." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form 1098, Mortgage Interest Statement." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form 1098-E, Student Loan Interest Statement." Accessed Oct. 19, 2020.
- Internal Revenue Service. "Education Credits: Questions and Answers." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)." Accessed Oct. 19, 2020.
- Internal Revenue Service. "About Form 2441, Child and Dependent Care Expenses." Accessed Oct. 19, 2020.
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.