Each type of non-employment income requires a different version of the 1099 form to report that income to the IRS for tax purposes. For example, independent contractors and freelancers who earn $600 or more in non-employment income should receive a 1099-NEC and report that on their tax returns. Dividend income is reported via 1099-DIV, and interest on a 1099-INT.
1099s are essential to keep track of income that isnt recorded in your wages or salary found in a W-2. Indeed, the Internal Revenue Service (IRS) matches nearly all 1099s and W-2 forms (the wage-report forms from your employer) against your Form 1040 tax returns or other tax forms. If they dont match, the IRS may tell you that you owe more money.
Here are 10 things you should know about your 1099s, including a review of the various types and what to do if you dont receive your 1099 or its inaccurate.
Receiving a 1099 form can often catch taxpayers by surprise. Even if you know you should expect one, it’s easy to forget about it until that form shows up in your mailbox. But knowing when you can expect to get a 1099, why you’re getting it, and what to do when it arrives can help you avoid surprises during tax season.
What is a 1099?
A 1099 is a tax form that reports income you received outside of a regular job. It shows how much money someone else paid you over the course of a year
Some examples of income that could trigger a 1099 include:
- Freelance work
- Side jobs like rideshare driving
- Interest from savings accounts
- Investment dividends
- Income from the sale of certain assets
The business, bank, or other entity that paid you fills out the 1099 form with your name address, Social Security number, and the amount they paid. They send a copy to you and to the IRS.
You’ll need to report the income from the 1099 on your tax return so you can calculate whether you owe any taxes on that income.
When Will You Get a 1099 Form?
Most 1099 forms must be sent out by January 31 for the previous year’s income. For example, you would get a 1099-NEC reporting your freelance income from 2022 by the end of January 2023.
However, a handful of specialized 1099s have different due dates:
- 1099-B (stock sales): February 15
- 1099-S (real estate sales): February 15
- 1099-G (tax refunds, unemployment): January 31
- 1099-R ( IRA distributions): January 31
- 1099-DIV (dividends) : February 15
It’s a good idea to watch your mail carefully during late January and mid-February. Save any 1099s you receive since you’ll need that information for your taxes.
If you’re expecting a 1099 but it hasn’t arrived by the due date, follow up with the business that should have sent it. Mistakes do happen, so ask them to mail or reissue the missing 1099 if they failed to send it on time.
Why Do I Need To Report 1099 Income?
You need to report all income on your tax return, regardless of where it came from. The IRS knows you got the 1099 income because they get copies of the same forms. Not reporting it would be illegal tax evasion.
How you report the income depends on the type:
- 1099-NEC (freelance/independent contractor income): Goes on Schedule C to calculate self-employment tax and net business income
- 1099-INT (interest): Goes on the interest income line
- 1099-DIV (dividends): Goes on the dividends income line
- 1099-B (stock sales): Gets input on Form 8949 to calculate capital gains/losses
The exact reporting steps vary by income type. The instructions for each form explain what to do. Filing tax software or working with a tax pro can also help you accurately report 1099 income.
Do I Owe Tax on 1099 Income?
Maybe. Getting a 1099 doesn’t necessarily mean you owe extra tax on that income. For example:
- If the income was below your standard deduction amount, you may not have any taxable income.
- You may have business expenses that offset your 1099 freelance/contractor income.
- You may have investment losses than cancel out dividends or capital gains.
To determine what you may owe, input the 1099 info into tax software or have a tax professional review your situation. In some cases, you may even find that 1099 income scored you bigger tax breaks. For instance, freelance SE income can qualify you for big home office and retirement contribution deductions.
What If I Never Got a 1099 I Should Have?
It is possible that a business, bank, or other payer simply failed to send you a 1099 they should have. While you’re expected to report income whether you got a 1099 or not, having accurate paperwork can make filing easier.
If you notice certain income missing from your 1099s, take action to get the situation resolved.
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Contact the payer: Explain that you never received the expected 1099, and ask them to mail or reissue it now.
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Use past records: Gather invoices, bank statements, and other personal records that show the amount you were paid from that source.
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Request an IRS substitute 1099: If you can’t get the payer to give you the form, file Form 4868 to have the IRS contact them for a substitute. The IRS will then send you the corrected 1099 details.
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Self-report: Worst case, you’ll have to self-report the income on your tax return without a 1099. Your records will help you claim the income accurately. Make sure to note on your return that you did not receive a 1099 from that source.
As long as you take reasonable steps to get missing 1099s or reconstruct that income data, you likely won’t face penalties for filing without a formal 1099 document.
Can I Get a 1099 Corrected?
Yes, if you receive a 1099 that is wrong, do not hesitate to ask for a corrected version. Common 1099 errors include:
- Wrong income amount reported
- Wrong name/SSN/address
- Income reported twice from same source
- Income reported that belongs to someone else
Reach out to the business that issued the incorrect 1099 right away. They should have a formal process to verify errors, void the bad 1099, and reissue you a corrected 1099-C showing the right information.
Be sure to follow up if you don’t receive the corrected 1099 in a reasonable timeframe. Stay polite but firm, and explain that you cannot file your tax return accurately without the correct 1099 details.
When Do I Need To Send Out a 1099?
If you pay contractors, freelancers, or other self-employed people for services, you may be responsible for issuing 1099s too.
You must send a 1099-NEC to anyone you paid at least $600 for services over the course of a year. For attorneys or law firms you paid, the threshold is just $200.
And if you run a rental property, you’ll need to 1099 any person or company you paid at least $600 in rental-related payments like maintenance and repairs.
The hiree fills out a W-9 when you bring them on to provide their tax ID details. As the payer, you’ll use that info to properly fill out their 1099 for mailing by the January 31 deadline.
The Takeaway
Getting a 1099 is a signal to pay extra attention when filing your taxes. Be sure to report that income accurately based on what each 1099 form tells you. A little upfront preparation when 1099 season hits can save you headaches during tax time.
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Do I Have to Pay Taxes on a 1099 Form?
Typically, income that has been reported on a 1099 is taxable. However, there are many exceptions and offsets that reduce taxable income. For example, lets say a taxpayer has a gain from the sale of a home, meaning the selling price was higher than the original cost basis. The taxpayer might not owe taxes on that gain since they may qualify for an exclusion of up to $250,000, depending on their tax situation. Its best to consult a tax professional if youre unsure whether you need to pay taxes on your 1099 income.
What If You Don’t Get All Your 1099s
Record all of your tax documents to ensure you have received them in time to file your taxes. If you havent received a 1099, contact the employer or payer to request the missing documents. If the 1099 does not arrive in time, taxpayers must still file their tax return by the tax filing day for that year.
If the company submits a 1099 form to the IRS, but you dont receive it for some reason, the IRS will send you a letter (actually, a bill ) saying you owe taxes on the income. Please note that the letter may not arrive promptly, so its important to remember that you are responsible for paying the taxes you owe even if you dont get the form.
If a taxpayer hasnt received the expected 1099 for income earned—even if the business didnt file the 1099 form—the taxpayer might be able to report it under miscellaneous income.
1099 Tax Deductions Explained (2023)
When do I get a 1099 form?
You should receive most 1099 forms by the end of January, although the deadline is mid-February for a few. Income reported on a 1099 form is usually taxable, but not always. The IRS also receives copies of your 1099 forms, and you’ll probably receive a notice from the IRS if you don’t report taxable income from a 1099 form.
When do I need to file a 1099-nec?
If you use Form 1099-NEC to report sales totaling $5,000 or more, then you are required to file Form 1099-NEC with the IRS by January 31. You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.
Who should receive a 1099 form?
The recipient of the income, whether it’s an individual or a business, should also receive a copy of the 1099 form. The threshold for issuing most 1099 forms is $600 in a calendar year. If you pay an individual or a business at least $600 for services, rent, or other types of income, you must issue a 1099 form to report those payments.
What is a 1099 tax form?
A 1099 tax form is a statement generated by any entity or person — excluding your employer — that details an amount of money that you were paid. Copies of the form are sent to both you and the IRS. The type of 1099 you receive can depend on the entity or person — aka the payer — sending the form.
