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:

1. File a corrected 1099 form with the IRS.

2. Send a corrected copy to the recipient.

3. Check the "CORRECTED" box on the new form to indicate the correction.