What Are the Most Common 1099 Questions?

Form 1099 is a series of documents the Internal Revenue Service (IRS) refers to as “information returns.” Its function is to report certain types of payments made by a business to another person or entity that is not an employee. This allows the IRS to track income that isn’t captured on a Form W-2, used for wages paid to employees. By requiring payers to report this information, the IRS can cross-reference the data with the recipient’s tax return to ensure all income is accounted for.

Who Must Issue a Form 1099

A person or entity must issue a Form 1099 when they have made certain payments in the course of their “trade or business,” which the IRS defines as any activity for the production of income. Personal payments, such as paying a designer for a wedding invitation, are not reportable. The most common trigger is paying an independent contractor $600 or more for services during the calendar year. This threshold is an aggregate, meaning multiple payments to the same person totaling $600 or more require a 1099. Other reportable payments of $600 or more include rent, prizes, awards, and payments to an attorney.

An exception applies to payments made to most C or S Corporations, though payments for legal and certain healthcare services must be reported regardless of corporate status. To determine a vendor’s business structure, a payer should request a completed Form W-9 before issuing payment. Another exception involves the payment method, as payments made through credit cards or third-party networks like PayPal are not reported by the payer. Instead, the payment settlement entity reports these on Form 1099-K, which prevents the same income from being reported twice.

Preparing to File Your 1099s

Preparation begins with gathering information using Form W-9, “Request for Taxpayer Identification Number and Certification.” This form collects a vendor’s legal name, business entity type, address, and Taxpayer Identification Number (TIN). It is a best practice to obtain a signed W-9 from every vendor before issuing their first payment to ensure you have accurate information on file.

Once you have the W-9s and your payment records, you must determine which 1099 form to use. Form 1099-NEC, “Nonemployee Compensation,” is used specifically to report payments of $600 or more made to independent contractors for services. Form 1099-MISC, “Miscellaneous Information,” is now used for other types of payments, including at least $600 for rent, prizes, and attorney fees, or royalty payments of $10 or more. For example, you would issue a 1099-MISC to a landlord for office rent and a 1099-NEC to a graphic designer for services.

With the correct form identified, you will transfer the information from the vendor’s W-9 and your accounting records onto the 1099. The payer’s information and the recipient’s information are entered in the designated boxes, along with the total amount paid. Official, scannable copies of the forms can be ordered for free from the IRS or purchased from office supply stores. You cannot simply download and print a copy from the IRS website for paper filing.

The 1099 Filing and Submission Guide

For Form 1099-NEC, the deadline is January 31 to furnish copies to the recipient and file with the IRS, regardless of filing method. The deadlines for Form 1099-MISC are different. You must send Copy B to the recipient by January 31, but the deadline for filing with the IRS is February 28 if filing by paper, or March 31 if filing electronically.

For paper filing, you must use the official red-ink scannable forms. When you mail these forms, you must also include a Form 1096, “Annual Summary and Transmittal of U.S. Information Returns.” This form acts as a cover sheet, summarizing the information from all the 1099s of a single type. A separate 1096 is required for each type of 1099 form you file.

Electronic filing is required for filers of 10 or more information returns in aggregate during a calendar year. The IRS offers online portals, such as the Information Returns Intake System (IRIS), which allows businesses to e-file for free. Many third-party software providers can also manage the e-filing process for a fee. E-filing does not require a Form 1096, and some states have their own 1099 filing requirements.

What to Do After Receiving a Form 1099

As a recipient, upon receiving a Form 1099-NEC or 1099-MISC, you should verify all the information. Check that your name, address, and Taxpayer Identification Number (TIN) are correct. Confirm that the payment amount reported matches your own records for what you were paid by that payer during the calendar year.

The income reported on a 1099 must be included on your tax return. For freelancers and independent contractors, income shown on Form 1099-NEC is reported as business income on Schedule C, “Profit or Loss from Business.” This form is filed with your personal Form 1040 tax return, where you list gross receipts and subtract allowable business expenses to determine your net profit.

This net profit is subject to two types of tax: regular income tax and self-employment tax. Self-employment tax is the self-employed person’s version of Social Security and Medicare taxes. It has two parts: a 12.4% Social Security tax that applies up to an annual income limit ($176,100 for 2025), and a 2.9% Medicare tax that applies to all net earnings.

If you discover an error on a 1099, such as an incorrect payment amount, you should contact the payer who issued it. Explain the discrepancy and request that they issue a corrected Form 1099. The payer can do this by filling out a new form, checking the “CORRECTED” box, and sending it to both you and the IRS. Do not change the number on your copy, as the IRS goes by the amount the payer submitted.

Even if a business fails to send you a required 1099, your legal obligation to report the income does not change. You are required to report all income you earn, whether a 1099 was issued or not. Use your own records, such as invoices and bank deposits, to accurately calculate and report your total income to avoid back taxes, penalties, and interest.