Overview
Form 1099 is not a single form but a series of tax information returns the IRS uses to track income that isn’t reported on Form W‑2. Common examples include payments to independent contractors, interest from banks, dividends, broker proceeds from stock sales, and certain government payments. The payer (business, financial institution, or government agency) generally issues a 1099 to the recipient and files a copy with the IRS so both sides report the same income.
In my practice working with small businesses and self‑employed clients, I routinely see missed or misclassified 1099s cause delays, underreported income, and avoidable penalties. Treat 1099s as matchable IRS records: if it exists, you must report it (even if you don’t receive the form).
IRS guidance: see About Form 1099 and 1099 filing rules on the IRS website for the latest details and form‑specific instructions (irs.gov/about‑form‑1099 and irs.gov/businesses/small‑businesses‑self‑employed/1099‑forms‑reporting‑requirements).
Common Types of Form 1099
- 1099‑NEC — Nonemployee compensation (independent contractors). This form returned to use in 2020 and is now the primary document for reporting contract labor.
- 1099‑MISC — Miscellaneous income such as rents, prizes, awards, and certain payments to attorneys (some boxes remain on 1099‑MISC for non‑NEC items).
- 1099‑INT — Interest income paid by banks and other financial institutions.
- 1099‑DIV — Dividends and distributions from investments.
- 1099‑B — Proceeds from broker and barter exchange transactions (stock sales, certain crypto brokerage reporting).
- 1099‑G — Certain government payments, including state unemployment compensation and tax refunds in some cases.
- 1099‑K — Payment card and third‑party network transactions (marketplaces and processors). Note: reporting rules and thresholds for 1099‑K have changed in recent years — always confirm current IRS guidance.
- 1099‑R — Distributions from retirement accounts and pensions.
Each variation has its own filing instructions and thresholds. For in‑depth comparisons see our guides on Choosing Between Form 1099‑NEC and W‑2 and the differences between Form 1099‑MISC and 1099‑NEC.
Internal links:
- Choosing between Form 1099‑NEC and W‑2: https://finhelp.io/glossary/choosing-between-form-1099-nec-and-w-2-employee-vs-contractor/
- Form 1099‑MISC vs. 1099‑NEC: https://finhelp.io/glossary/form-1099-misc-vs-1099-nec/
- Form 1099‑K details: https://finhelp.io/glossary/form-1099-k-payment-card-and-third-party-network-transactions/
Who must file and who receives a 1099
Payers who make certain payments in the course of trade or business must issue the appropriate 1099 to each recipient and file with the IRS. Typical examples:
- Businesses paying independent contractors $600 or more in a calendar year will usually issue a 1099‑NEC.
- Banks report interest (1099‑INT) when interest meets the reporting threshold.
- Brokers report sale proceeds (1099‑B) for securities and certain crypto transactions.
Recipients include independent contractors, landlords, investors, and individuals who receive reportable government payments. However, reporting thresholds and exceptions vary by form — for instance, corporations are often exempt from receiving some 1099s except in specific cases (e.g., legal settlements paid to attorneys).
If you’re unsure whether to issue a 1099, start by collecting a W‑9 from vendors and contractors to capture legal names, taxpayer identification numbers (TINs), and backup withholding status.
Deadlines and filing options (practical summary)
Deadlines matter and differ by form type and submission method:
- Recipient copy: generally must be sent to recipients by January 31 (confirm form‑specific exceptions on IRS pages).
- Filing with the IRS: for Form 1099‑NEC, the deadline to file with the IRS (paper or electronic) is January 31. For most other 1099s, paper filing is due February 28, and electronic filing is due March 31 (confirm current year deadlines on the IRS site).
Electronic filing is required if you submit 250 or more information returns (threshold may change); many organizations file electronically anyway to reduce errors. If you miss a deadline, file as soon as possible and consult the IRS penalty guidance — penalties increase the longer you wait.
Reporting income you didn’t receive a 1099 for
Not receiving a 1099 does not relieve you from reporting income. All income is taxable unless a specific exclusion applies. Common situations:
- A contractor who earned $500 from a client but received no 1099 must still report the $500 on Schedule C (or the appropriate form).
- Investment or bank interest must be reported even if a bank fails to issue a 1099‑INT.
If you believe a payer should have issued a 1099 but didn’t, request a copy, keep supporting records (bank deposits, invoices, statements), and report the income on your tax return. If the payer refuses and the amount is significant, you can contact the IRS for assistance.
Common mistakes and how to fix them
- Wrong TIN or name on the 1099: Request a corrected 1099 from the payer and verify your records. Employers and payers should use Form W‑9 to collect correct TINs up front.
- Misclassified worker: Misclassifying employees as independent contractors causes payroll and tax issues. See our article on choosing between Form 1099‑NEC and Form W‑2 for classification guidance.
- Duplicate reporting or omitted amounts: Reconcile 1099 amounts with your own books before filing. If you or a payer file incorrectly, corrected forms exist (e.g., corrected 1099‑MISC) — file corrections promptly.
If the IRS sends a CP or notice about a mismatch between reported amounts, respond quickly with documentation or correct the return as instructed.
Penalties and enforcement
The IRS can assess penalties on payers who fail to file correct information returns or fail to furnish recipient copies. Penalties depend on how late the returns are and whether failure to file was intentional. For recipients, failing to report income can trigger underpayment penalties, interest, and increased audit risk.
For precise penalty schedules and relief options, consult IRS penalty guidance and look for programs such as reasonable cause relief if you can show you acted in good faith.
Best recordkeeping and compliance practices (practical tips)
- Collect a completed Form W‑9 before paying a new contractor.
- Use accounting software to tag transactions as reportable and to generate 1099 summaries year‑end.
- Reconcile third‑party payment processor reports with your books; processors may issue a 1099‑K that differs from your records.
- Keep copies of all issued 1099s and proofs of mailing/e‑filing for at least three years.
In my experience, small businesses that set up a 1099 checklist and maintain consistent bookkeeping avoid the majority of 1099‑related headaches during tax season.
Example scenarios
- Freelance graphic designer: Receives several 1099‑NEC forms from clients. She totals them on Schedule C and deducts legitimate business expenses. If a client issues a 1099‑MISC by mistake, she asks for a corrected 1099‑NEC.
- Landlord: Receives rental income but no 1099 from tenants (tenants generally don’t issue 1099s for rent). The landlord still reports rental income on Schedule E and keeps bank deposit records.
How to correct mistakes and where to get help
- If you are the payer and made an error, file a corrected 1099 with the IRS and furnish corrected copies to recipients. Follow the IRS correction instructions for the specific 1099 variant.
- If you are a recipient with a wrong 1099, contact the payer for a correction. If the payer won’t cooperate and the error affects your return, attach an explanation and any supporting documentation when you file, and be prepared to respond to IRS notices.
When in doubt, consult a tax professional or the IRS resources. Our guides on correcting W‑2 and 1099 errors and on penalties for late 1099 submission explain common correction workflows and consequences: https://finhelp.io/glossary/employer-responsibilities-correcting-w-2-and-1099-errors-after-filing/ and https://finhelp.io/glossary/penalty-for-late-1099-submission/.
FAQ (concise)
- Do I have to report income if I didn’t get a 1099? Yes — all taxable income must be reported. Keep supporting records.
- What if I get a 1099 with wrong amounts? Ask the payer for a corrected form; reconcile your records and file corrections if you’re the payer.
- Are corporations exempt from 1099s? Some payments to corporations are exempt, but exceptions apply (for example, payments to attorneys may still require reporting). Check form instructions.
Sources and next steps
Authoritative sources: IRS — About Form 1099 and 1099 Forms Reporting Requirements (irs.gov). For up‑to‑date thresholds, due dates, and form instructions, always consult the IRS site and current year publications.
Disclaimer: This article is educational and not individualized tax advice. For decisions affecting your taxes, consult a qualified tax professional.
Further reading on FinHelp:
- Choosing between Form 1099‑NEC and W‑2: https://finhelp.io/glossary/choosing-between-form-1099-nec-and-w-2-employee-vs-contractor/
- Form 1099‑MISC vs. 1099‑NEC: https://finhelp.io/glossary/form-1099-misc-vs-1099-nec/
- Form 1099‑K details: https://finhelp.io/glossary/form-1099-k-payment-card-and-third-party-network-transactions/
(Last reviewed: 2025)
