A 1099 form is an IRS tax document used to report various types of income received by non-employees, such as independent contractors, freelancers, and service providers. It helps the IRS track income that is not reported on a W-2.

Any business or individual that pays a non-employee $600 or more in a tax year for services rendered must file Form 1099-NEC (Nonemployee Compensation). Other types of 1099s apply to different forms of income, such as 1099-MISC for rent, royalties, and prizes, or 1099-INT for interest income.

The most commonly used 1099 forms include: 1099-NEC – Reports nonemployee compensation (contractors, freelancers, etc.). 1099-MISC – Reports rents, prizes, awards, royalties, and other miscellaneous income. 1099-INT – Reports interest income from banks or financial institutions. 1099-DIV – Reports dividends and distributions from investments. 1099-K – Reports third-party payment transactions (e.g., PayPal, Venmo, Stripe). 1099-R – Reports distributions from retirement accounts, pensions, or annuities.

A 1099-NEC is required if you: Paid $600 or more to an independent contractor or non-employee. Paid them via cash, check, or direct deposit (not through credit cards or third-party payment processors). The individual or business is not a corporation (except for attorneys and some medical payments). A 1099-MISC is required for: Rents ($600+ paid to a landlord). Royalties ($10 or more). Prizes and awards ($600+). Payments to attorneys ($600+).

January 31 – 1099-NEC must be filed with the IRS and sent to the recipient. February 28 – Paper filing deadline for 1099-MISC and other 1099s with the IRS. March 31 – E-filing deadline for 1099-MISC and other 1099s with the IRS.

You can file 1099 forms using the following methods: E-file using the IRS FIRE system or an IRS-approved e-file provider. Mail paper copies to the IRS (if filing fewer than 250 forms). Send a copy to the recipient by the deadline.

Some states require 1099 filings, while others rely on IRS reporting. Most states that have income tax require 1099-NEC filings if state tax was withheld. Some states require direct filing, even if you filed with the IRS. Check your state’s tax agency website for specific requirements.

Failure to file on time can result in penalties: (Rates as of 2025) $65 per form if filed within 30 days late. $130 per form if filed more than 30 days late but before August 1. $330 per form if filed after August 1 or not filed at all. $660 per form for intentional disregard.

Yes, a W-9 form (Request for Taxpayer Identification Number) should be collected before paying a contractor. It helps you gather the necessary tax details for 1099 filing.

No, if you paid a contractor using a third-party payment processor (like PayPal or Venmo for business payments), or a credit card, you do NOT need to issue a 1099-NEC. These payments are reported on Form 1099-K by the payment processor, if applicable.

If you discover an error after filing, you must: File a corrected 1099 form with the IRS. Send a corrected copy to the recipient. Check the "CORRECTED" box on the new form to indicate the correction.