Quick overview

Form 1099s are information returns. Payers (businesses, financial institutions, platforms) send them both to recipients and to the IRS to report non-employee income so the agency can cross-check tax returns. Mistakes or missed forms trigger IRS notices and can lead to penalties, so understanding which 1099 to use, when to send it, and how to fix errors matters for both payers and payees.

Which 1099 types are most common and when to use them

  • 1099-NEC — Nonemployee compensation: use this to report payments of $600 or more in a calendar year to independent contractors and freelancers for services. The NEC was reintroduced for tax year 2020 to separate contractor pay from other misc payments (IRS: About Form 1099-NEC).

  • 1099-MISC — Miscellaneous income: still used for rents, prizes, awards, medical and health care payments and other income not reported on the NEC. Lines on the MISC are specific — don’t move contractor pay here if it belongs on the NEC.

  • 1099-INT — Interest income: banks and payers report interest of $10 or more (threshold applies to recipient copies) and other interest details.

  • 1099-DIV — Dividends and distributions: issued by brokers and corporations to report dividends, capital gain distributions, and related tax information.

  • 1099-B — Proceeds from broker and barter exchange transactions: used to report sales of stocks, bonds, and certain crypto transactions when handled by brokers.

  • 1099-K — Payment card and third-party network transactions: issued by payment settlement entities. Rules and thresholds have changed in recent years — always check current IRS guidance for the year you’re reporting (IRS: About Form 1099-K).

This list isn’t exhaustive. The IRS publishes details for each variation (1099-R, 1099-S, 1099-SA, etc.). See the IRS forms pages for specifics.

Source: IRS information on Forms 1099 (irs.gov/forms-pubs/about-form-1099).

Key deadlines (practical summary; confirm annually)

Note: the IRS updates deadlines and filing rules occasionally. As a general framework:

  • Furnish recipient copies: January 31 — many 1099s (including 1099-NEC and many 1099-MISC boxes) must be sent to recipients by January 31 of the year following the tax year.

  • File with the IRS (1099-NEC): January 31 — the 1099-NEC has a firm deadline to the IRS (paper or electronic) on Jan 31.

  • File with the IRS (other 1099s): if filing by paper, typically due by February 28 (or 29 in leap years); if filing electronically, due March 31. Many payers e-file to meet these later deadlines more reliably.

Why this matters: missing or late filings can trigger penalties under IRS rules for late information returns. If you’re a payer, plan W-9 collection and record reconciliation early — January is busy for CPAs and payroll vendors.

Primary source for deadlines and filing requirements: IRS instructions for each 1099 form (irs.gov/forms-pubs).

Common errors that cause IRS mismatches or notices

  1. Wrong form type. Placing contractor compensation on 1099-MISC when it belongs on 1099-NEC (or vice versa) creates mismatches.

  2. Incorrect taxpayer identification (name/SSN/EIN). Even small typos cause IRS automated mismatch notices. Use Form W-9 to collect accurate payee info and verify before submitting.

  3. Missing payees. Forgetting to issue a 1099 for a payee you paid $600+ (or otherwise reportable amounts) produces underreporting issues.

  4. Misstated amounts. Rounding inconsistencies, omitted fees, or reporting gross vs. net incorrectly (especially for 1099-K vs. 1099-NEC) lead to confusion.

  5. Late filing or furnishing. Missing January deadlines (or the IRS filing dates) can lead to escalating penalties based on how late the return is.

  6. Backup withholding failures. If a payee is subject to backup withholding and the payer doesn’t withhold or report, the IRS will assess tax and penalties. (Current backup withholding rate is available on the IRS backup withholding pages.)

If you’re a payer, add an internal control: reconcile gross payments in your accounting system to the amounts reported on each 1099 before filing.

What payees should do when they receive a 1099

  • Reconcile every 1099 to your records before you file. Compare payer A/R or bank deposits to the boxes on the 1099.

  • If a 1099 is incorrect, contact the issuer immediately and request a corrected form. If the issuer won’t correct it, document your outreach and consider attaching an explanation to your tax return or seeking professional help.

  • Report all income even if you don’t receive a 1099. The IRS expects you to report income regardless of whether a form was issued.

In practice: I’ve seen freelancers receive duplicate 1099s for the same client (platform vs. direct pay). Reconciling bank deposits and asking both payers for clarification cleared the issue before filing.

How payers correct a mistake

  • Issue a corrected 1099: follow the IRS instructions for preparing a corrected form (check the ‘corrected’ box and provide accurate values).

  • File the corrected copy with the IRS. If you filed electronically and the IRS accepted the original, file the corrected electronically per e-file correction procedures.

  • Notify the recipient and provide the corrected copy promptly.

See the IRS employer responsibilities and correction guidance for step-by-step procedures.

Penalties and enforcement (practical expectations)

Penalties for late or incorrect filing can vary based on how late the correction or filing is and whether the failure was intentional. The IRS can assess monetary penalties per return and may increase amounts for intentional disregard. For recipients, failing to report income can trigger notices and potential additional tax owed with interest and penalties.

If you receive an IRS notice about a mismatch, don’t ignore it. Start by reviewing your copies and then contact the payer; if you can’t resolve it yourself, consult a tax professional.

Best-practice checklist

For payers:

  • Collect a completed Form W-9 before the first payment.
  • Reconcile totals each month and again at year-end.
  • Choose a reliable filing method (e-file providers reduce paper errors).
  • Implement backup withholding checks for unverified TINs.

For payees:

  • Track gross receipts and bank deposits by client.
  • Keep W-9 copies and records of invoices and payments.
  • Reconcile 1099s as soon as they arrive and request corrections promptly.
  • Consider estimated tax payments if you’re self-employed and expect tax due.

Real-world examples from practice

  • Small contractor: A construction subcontractor received a 1099-MISC listing subcontract payments, but his bookkeeping showed payments were processed through a third-party platform (possible 1099-K). By comparing bank statements and requesting clarification from both the platform and the client, he avoided duplicate income reporting and a later IRS notice.

  • Small business owner: A retail owner accidentally entered sales returns as positive amounts when preparing 1099-MISC forms. Filing corrected 1099s within 30 days of discovery limited penalties and avoided downstream audit triggers.

When to call a pro

If you get IRS notices, face complex transactions (partnership allocations, bartered services, digital-asset settlements), or you’re unsure which 1099 to issue, consult a CPA or enrolled agent. I regularly advise clients to get professional help when more than a handful of 1099s are involved or when amounts are material to the business’s tax position.

Related resources

Authoritative references

Professional disclaimer

This article is educational and reflects general tax practice as of 2025; it is not personalized tax or legal advice. For guidance tailored to your situation, contact a qualified tax professional or the IRS.