Here’s a quick and easy guide to understand 1099s better.
What are IRS Form 1099s?
1099 forms are used to record non-employment income to the IRS. These are used to provide information to the IRS about different types of income outside your regular salary throughout the year. This is essential in filing your IRS form 1040.
Why did I get a 1099?
This is because your client or payor have contracted your services for more than $600 during the applicable year.
What are the types of Income to receive a 1099?
You probably received 1099 because of the following non-employment income sources:
- independent contracts
- income from interest and dividends
- rental property income
- other miscellaneous income
Who receives a copy of 1099?
Aside from you, your payor also sends a copy to the IRS.
What are the types of 1099 forms?
There are 20 1099 forms. The most common ones are the following:
- 1099-NEC: Used to report your income as an independent contractor
- 1099-MISC: Contains other miscellaneous income information such as rent and royalties
- 1099-INT: You get this when the source of income comes from interests of $10 or more
- 1099-DIV: Reports dividends you received
There’s an error in my 1099, what do I do?
Inform your payor immediately as soon as you detect the error. If the payor has sent the copy to the IRS, request the payor to send a corrected form. Remind the payor to check the boxes on the top of each page that contains “Corrected” so that the IRS wouldn’t add up the reports.
I have not yet received my 1099 form, what do I do (before Jan 31)?
Contact your payors immediately. They may have sent it to the wrong address if the 1099 was dispatched via mail or they may have sent it to a wrong email address if they sent it via electronic filing.
Learn more about the 20 forms for 1099 and what to do with them.
Sources:
- What is 1099 – NerdWallet
- TurboTax on IRS form 1099
- IRS Form 1099
- 10 things you should know about 1099s – Investopedia
- Forbes Business – Ten Things you should know about IRS Form 1099