Every January, 1099 forms start arriving — from clients, banks, investment platforms, and the IRS itself. If you're a freelancer, contractor, or investor, these forms can be confusing. Here's everything you need to know.
What Is a 1099?
A 1099 is an information return — a form sent to both you and the IRS reporting income you received that wasn't reported on a W-2. It's the government's way of tracking non-employment income.
You'll receive a 1099 from anyone who paid you $600 or more during the year (for services), or from financial institutions reporting interest, dividends, and transactions.
The Most Common 1099 Types
1099-NEC (Non-Employee Compensation)
Who sends it: Clients and businesses that paid you $600+ for freelance work, contracting, or services. Box 1: Your total payment — this is self-employment income, subject to both income tax and self-employment tax (15.3%). Action: Report on Schedule C of your tax return.
1099-MISC (Miscellaneous Income)
Who sends it: Businesses for rent, royalties, prizes, legal settlements, and other payments. Key boxes:
- Box 1: Rents
- Box 2: Royalties
- Box 3: Other income (prizes, awards)
- Box 6: Medical/health care payments Action: Varies by box — rent goes to Schedule E, other income to Schedule 1.
1099-INT (Interest Income)
Who sends it: Banks and credit unions when you earn $10+ in interest. Box 1: Total interest earned. Box 4: Federal income tax withheld (if any). Action: Report on Schedule B. If total interest across all accounts is under $1,500, you can report it directly on Form 1040.
1099-DIV (Dividend Income)
Who sends it: Brokerage accounts and mutual funds. Key boxes:
- Box 1a: Total ordinary dividends
- Box 1b: Qualified dividends (taxed at lower capital gains rates)
- Box 2a: Total capital gain distributions Action: Report on Schedule B and Schedule D as applicable.
1099-B (Proceeds from Broker Transactions)
Who sends it: Your brokerage when you sell stocks, bonds, or crypto (on some platforms). Key information:
- Date acquired and date sold
- Cost basis (what you paid)
- Proceeds (what you received)
- Whether the gain/loss is short-term or long-term Action: Report each transaction on Form 8949, then summarize on Schedule D.
1099-R (Retirement Distributions)
Who sends it: Pension plans, IRAs, 401(k)s when you take a distribution. Box 1: Gross distribution Box 2a: Taxable amount Box 7: Distribution code — critical for determining taxes and whether an early withdrawal penalty applies Action: Report on Form 1040. If Box 7 has code 1 and you're under 59½, you'll also owe a 10% penalty.
1099-G (Government Payments)
Who sends it: State or federal government. Common uses: Unemployment compensation (Box 1), state tax refunds (Box 2). Important: Unemployment income is fully taxable. Report on Schedule 1.
1099-K (Payment Card and Third-Party Network Transactions)
Who sends it: Payment processors like PayPal, Venmo (business accounts), Stripe, Square, Etsy. What it covers: Business payments processed through these platforms. Current threshold (2024+): $5,000+ (IRS revised this threshold multiple times; check the current year's rules). Action: Report as business income on Schedule C. Keep records to offset with business expenses.
Reading Your 1099: Box by Box
Every 1099 has:
- Payer information (top left): Who sent you money
- Recipient information: Your name, address, and TIN (SSN or EIN)
- Account number: Reference for that payer's records
- Numbered boxes: The actual income and withholding amounts
What to Do If Your 1099 Is Wrong
If the amount on a 1099 is incorrect:
- Contact the payer immediately and ask for a corrected 1099 (Form 1099 with the "CORRECTED" box checked)
- Don't wait — corrected forms should be issued by mid-February; you'll need them before April 15
- If you can't get it corrected in time: Report the correct amount on your tax return with a notation explaining the discrepancy
Never simply omit a 1099 you disagree with. The IRS received a copy of the same form. Discrepancies trigger automated notices (like the CP2000).
What If You Didn't Receive a 1099 You Expected?
You must report all income — even without a 1099. If a client paid you $800 and didn't send a 1099, that income is still taxable. Report it on Schedule C.
If you're waiting for a 1099 that hasn't arrived:
- Check with the payer — it may have been sent to an old address
- Log into your accounts — many platforms post 1099s digitally in January
- Request a copy from the payer
Got a 1099 and not sure exactly what to do with it? PaperLens reads any tax document and explains every box in plain English, including what goes on which tax form. Scan your 1099 →