All Types of 1099 Forms Explained

Table of Contents

4. Other kinds of 1099s that you may encounter

5. If not all of my 1099s are sent to me, what should I do?

What are 1099s?

Ahead of tax season, you should keep an eye out for envelopes addressed “tax information” in your mail. A multitude of distinct 1099 tax forms are only one of the several items they could include. However, why are they necessary and what is their purpose? Let’s take a look.

When money is obtained outside of a permanent salaried position, it is documented using a 1099 form. 1099 forms come in a wide variety of forms. By January 31st of each year, any entity or person from whom you have received payment must provide you with this tax form (employers must also provide a W-2 form by this date).

Given the tiny amounts involved, you may find it tempting to exclude this information from your tax return. But keep in mind that these companies forward your 1099s to the Internal Revenue Service as well. Your filed tax return and the information on file will be examined to determine if there are any dissimilarities.

After the IRS announced that transactions involving more than $600 made via third-party payment applications would need to be reported, the topic of revenue from 1099s has been in the news recently. Although the IRS later postponed its demand for the current tax year, it is nonetheless crucial to remember.

Form 1099 is a tax document used to report various types of income other than wages, salaries, and tips. It is closely related to both gross and net income, as it details the total amount of income received (gross income) before any deductions or adjustments, which are then used to calculate the net income.

How should I handle my 1099s?

A 1099 form details the money you made that you did not get from your employer. While freelancers, independent contractors, and gig workers receive a 1099, employees receive a W-2. Since everyone providing a 1099 or W-2 will also give the IRS a copy, taxpayers should register for a free ID.me account to find out what papers they should anticipate receiving this year.

Some taxpayers get nonemployee, or 1099, income for the majority (or perhaps all) of their earnings in a given year. More and more people depend on side jobs and other sources of money to get by. According to a Harris survey of 2,032 respondents conducted on behalf of the marketing automation startup Zapier, four out of ten Americans have a side business that brings in an extra $12,689 year on average. Certain individuals may receive different sorts of 1099s since having more income streams can result in more tax forms.

The first thing you should do if you have gotten one or more 1099s in the past few weeks is register for an IRS account and look over the tax documents linked to your Social Security number.

After you have gathered all your paperwork, determine if you will file this year with the assistance of a tax professional.

A California employer defense lawyer typically becomes involved with issues related to Form 1099 when there are disagreements or legal concerns over the classification of workers as independent contractors versus employees. Their expertise is crucial in resolving disputes that arise from misclassification, which can lead to legal challenges and financial liabilities for the business.

The most popular types of 1099 forms

1099 tax forms come in a variety of forms, and a lot of them are related to very particular financial circumstances. You’ll probably run into at least one of the following if you earned money outside of your full-time employment.

1099-INT

Your interest earned on savings is shown on Form 1099-INT. For instance, if you possess a high-yield savings account and this year’s interest total is $50, you and the bank must record that amount as income. You will be responsible for paying taxes.

Banks are conscientious about distributing 1099-INT documents on time. You’ll probably get this form electronically if you only get paperless statements.

1099-DIV

Income from distributions and investment dividends is reported on Form 1099-DIV. Dividends from mutual funds or stocks in your brokerage account count as income if you have any of these investments. Dividends accumulated in tax-sheltered retirement funds, like an IRA or 401(k), are not eligible for this dividend income.

1099-MISC

Form 1099-MISC is used to record supplemental revenue. A 1099-MISC should have been sent to you if a firm paid you more than $600 in a single year. Prize money, payments to lawyers from gross revenues, and rent for equipment or space are examples of income types. Prior to the reintroduction of Form 1099-NEC in 2020, Form 1099-MISC was also used to record compensation received from non-employees. However, this practice was terminated.

Pino added that not much fits in that group any longer. This is because the MISC has evolved into a real miscellaneous category and does not include pay anymore. According to Pino, getting a 1099-MISC is now most frequently associated with buying a home because you can deduct your one-time mortgage interest and property tax.

1099-NEC

Compensation for non-employees is recorded on Form 1099-NEC. If you worked as a freelancer, gig worker, or self-employed person last year and earned more than $600 in revenue, you will be sent this form.

As previously discussed, up until 2020, this revenue was reported on the 1099-MISC. This is the reason if, after years of freelancing, you no longer get a 1099-MISC form but rather this one.

Taylor states that you should anticipate receiving a 1099-NEC if you are paid according to the terms of your contract and are not an employee of the company on a full-time basis.

If you earn income as an independent contractor, the IRS will treat you as a single proprietor. This is the case even if you do not have an official business entity. You may be required to pay self-employment taxes on the income.

1099-K

Income received through a third-party payment processing platform is recorded on Form 1099-K. It’s comparable to non-employee remuneration, but the payment was made via PayPal, Cash App, or Venmo rather than the company itself.

In the past, payment processing companies were only required to issue a 1099-K to customers who had more than 200 transactions totaling at least $20,000 in revenue in a single year. This tax season was intended to see the implementation of the new rule, which dropped the threshold to $600 annually. However, the IRS announced a strategy to roll out implementation gradually since the new reporting requirement would clog systems and overwhelm taxpayers.

Tax experts predict a rough start when the new limit is implemented in the upcoming years, especially since some taxpayers may receive a 1099-K and a 1099-NEC for the same income. Taylor warned not to report both or risk being double-taxed.

The fact that a 1099-K form discloses gross income is significant. Make sure to include these charges in your deductions as you probably paid fees to the payment processing provider to use their services.

1099-B

Income from the selling of securities at a barter exchange or brokerage is reported on Form 1099-B. The gain or loss on any stock sales you made last year will be shown on a 1099-B. Make sure you file this form diligently, even if you sold at a loss. Some of your losses might be carried over to the next year, which would balance any taxes that would be due on future gains.

Other kinds of 1099s that you may encounter

You may also get one or more of these 1099s, albeit the six listed above are the most typical.

1099-A

A form known as Form 1099-A records the abandonment or acquisition of secured property. Your lender will send you this form if you lost a property to foreclosure so you can record capital losses. Approximately 300,000 residences filed foreclosure filings in 2022, following a real estate data business analysis from ATTOM.

Your lender may forgive your debt if the amount of your foreclosure sale was less than the outstanding balance on your mortgage and they conclude you are not able to make the payments. In addition, since canceled debt is regarded as income, you should anticipate receiving Form 1099-C if this occurs.

1099-C

Documenting the debt cancellation is Form 1099-C. Your lender will forward that paperwork to the IRS and you if your loan has been forgiven. In the year that your debt is forgiven, the amount is treated as taxable income. Charge-offs on credit cards or foreclosures on real estate are two instances of canceled debt.

For the most part, obligations discharged in bankruptcy do not apply to Form 1099-C.

1099-CAP

A form called Form 1099-CAP records changes in capital structure and corporate control. If you had equity in a company and it was bought out or saw a significant change in its capital structure, you might be required to disclose any gains you made in cash, stock, or other assets.

1099-G

Unemployment benefits and other specific government payments, like reimbursements for local or state taxes, taxable grants, and payments from the Department of Agriculture, must be reported using Form 1099-G.

1099-H

Payments made in advance to partially cover specific eligible health insurance expenses are recorded on Form 1099-H.

Taxpayers who received Trade Adjustment Assistance (TAA), reemployment TAA, or benefits from a Pension Benefit Guaranty Corporation were relieved by the Health Coverage Tax Credit from 2002 to 2021. Through a tax credit, this legislation assisted vulnerable Americans in lowering the cost of health insurance.

Legislative attempts to extend this program are underway, but as of this writing, US Senate talks are at a standstill. This form can appear if you are filing or making changes to returns from previous years.

1099-LTC

Form 1099-LTC records earnings from accelerated death benefits or long-term care.

People can manage the unpredictability of what kind of care they’ll require in their later years by purchasing long-term care insurance. If you are actively using your insurance policy, you can receive a 1099-LTC.

When a life insurance policyholder is paid out ahead of time because a doctor has determined they are terminally sick, this is known as an accelerated death benefit. This benefit is meant to provide comfort to the policyholder and assist in paying for medical expenses.

1099-LS

Form 1099-LS records the acquisition of a life insurance policy interest.

The Internal Revenue Code now has a new section named 6050Y thanks to the Tax Cuts and Jobs Act of 2017. The IRS developed two new 1099 forms, Form 1099-LS and Form 1099-SB, to record “reportable policy sales” of life insurance in accordance with the new restrictions included in this statute.

If a business or an individual purchases a life insurance contract or any stake in a contract, they will receive Form 1099-LS. The selling of a policy must be disclosed, for instance, if a business buys out another and some of its assets include stakes in life insurance.

If a sale took place, it needs to be reported to the IRS. Everyone concerned will get a 1099-LS.

1099-OID

Form 1099-OID serves as documentation for an “original issue discount.”

An original issue discount occurs when the face value of a bond is less than the amount paid for it. When the bond matures, you’ll be able to redeem it at face value, and the IRS will count the difference as taxable income.

1099-PATR

Cooperative-issued taxable distributions are recorded on Form 1099-PATR. You will also receive this tax form if you are a member of a cooperative, like a farmer’s co-op, and you have received distributions or profits from the cooperative.

1099-Q

“Payments from qualified education programs” are recorded on Form 1099-Q. You will receive this form to prove your income if you received distributions for educational costs from a Coverdell education savings account (CESA) or 529 plan. The income might be subject to taxes or not.

1099-QA

The distributions made from an ABLE account are recorded on Form 1099-QA. Through the use of a tax-advantaged 529A ABLE account, the Achieving a Better Life Experience Act of 2014 assists individuals who experienced the beginning of a handicap prior to the age of 26 in saving money for disability-related expenses.

Medicaid and Supplemental Security Income (SSI) are two public policy initiatives that many taxpayers with disabilities depend on. The income ceilings for these programs are quite modest. For instance, your earned income must fall below the $1,470 (or $2,460 if you are blind) Substantial Gainful Activity (SGA) threshold each month.

The purpose of ABLE accounts is to assist taxpayers and the people they love in building a savings account that can help cover the costs of living with a disability. The money accumulated in these accounts is not taken into account when a person is applying for SSI or other government assistance.

An ABLE account allows for post-tax contributions, and any interest earned is tax free. These accounts will provide distributions, which will be reported on Form 1099-QA.

1099-R

Form 1099-R records annuities, distributions from pensions, IRAs and insurance contracts, and retirement or profit-sharing plans. You should anticipate receiving a 1099-R if these sources account for a portion of your income.

1099-S

Real estate transactions’ profits are reported on Form 1099-S. If you sold any real estate and the value increased, capital gains tax is due on the difference. There might be certain exceptions to this taxable gain, though.

This tax duty is relieved for many homeowners by the Taxpayer Relief Act of 1997. You are excluded from the first $250,000 of the profit ($500,000 if married and filing jointly) if the house you sold was your principal residence and you resided there for at least 24 months. You may only apply for this exemption once every two years.

1099-SA

Form 1099-SA records distributions from an Archer MSA, Health Savings Account (HSA), or Medicare Advantage MSA. The owner of the health savings account will issue you a 1099-SA to report any withdrawals you make from the account.

Tax savings are tripled with HSAs. A health savings account allows you to deposit money without paying taxes on it beforehand, withdraw it tax-free, and keep any interest you make tax-free as well. Your distributions must be utilized for qualified medical expenses in order to qualify for this tax benefit.

SSA-1099

Income from Social Security benefits is reported on the SSA-1099. An SSA-1042S is the form that noncitizens who reside outside of the US receive in place of this one. Those who now receive Supplemental Security Income (SSI) do not receive the SSA-1099 and SSA-1042S forms.

While Social Security income is subject to taxation, the precise amount of taxed income is contingent upon a number of variables. You can visit SSA.gov to obtain a new form or to find out the status of your Social Security benefits. Usually, replacement forms become available after February 1st.

1099-SB

A life insurance policy’s sale is likewise recorded on Form 1099-SB. However, the original policy issuer files this form after receiving a 1099-LS to record their investment and surrender amount. If the policy has been transferred to a foreign individual, the issuer is also required to file Form 1099-SB.

Reportable policy sales are subject to a number of important, recently established laws and regulations. If your business or you as an individual handle 1099-LS and 1099-SB documents, you should think about collaborating with a tax expert.

If not all of my 1099s are sent to me, what should I do?

It is mandatory to send all 1099s to recipients by January 31st of every year. Contact the issuer for help if you haven’t received your documents electronically or by mail yet.

Taylor advised filing your return as other income or self-employment income even if the individual or business does not intend to issue you a 1099.

But by February 28th, if your forms are still missing, check your ID.me account to see if the IRS has received a copy. Last but not least, you can give the IRS a call to see if you can utilize Form 1099-R in place of the missing income documentation.

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