What Type of 1099 Form Do Lawyers Get?
Lawyers, learn about the essential tax forms you receive for professional services and how to ensure accurate income reporting.
Tax Form 1099 reports various types of income paid to individuals or entities who are not employees. These forms ensure the Internal Revenue Service (IRS) is aware of income received outside of traditional wages. Businesses and individuals use Form 1099 to document payments made to independent contractors, freelancers, and other non-employees for services or other specific income types.
Nature of Payments for Legal Services
Payments for legal services fall under independent contractor income, not employee wages. The IRS distinguishes between an independent contractor and an employee based on control and independence. An independent contractor, like a lawyer with their own practice, controls how work is completed, focusing on the outcome rather than detailed instructions. This means the payer does not withhold income or payroll taxes from payments to the lawyer.
An employee’s work is subject to the payer’s control regarding what, when, and how work is performed. Payments to employees are reported on Form W-2, with taxes withheld by the employer. Since lawyers providing services generally operate independently, their payments are classified as nonemployee compensation, requiring the payer to issue Form 1099. This classification shifts responsibility for tax payments, including self-employment taxes, directly to the lawyer.
Primary 1099 Forms for Legal Professionals
Lawyers, as independent professionals, receive specific 1099 forms documenting their income. The particular form depends on the nature of the payment received. Each form serves a distinct purpose in reporting different categories of non-wage income.
Form 1099-NEC, Nonemployee Compensation
Form 1099-NEC is the primary document lawyers receive for legal services. It reports nonemployee compensation of $600 or more paid to an individual, partnership, or estate in the course of a trade or business. Box 1 of Form 1099-NEC details the nonemployee compensation received, including fees or commissions for services.
Form 1099-MISC, Miscellaneous Information
While Form 1099-NEC covers service payments, Form 1099-MISC reports other types of miscellaneous income a lawyer might receive. This form reports payments of $600 or more for items such as rents, prizes, or awards. For example, rental income from leased property or prize winnings would be reported on Form 1099-MISC.
Form 1099-K, Payment Card and Third-Party Network Transactions
Lawyers who accept payments through credit card processors or third-party payment networks, such as online payment platforms, may receive Form 1099-K. This form reports the gross amount of payment transactions processed through these services. For 2025, a Form 1099-K is issued if gross payments exceed $2,500. This form ensures that income received via electronic payment methods is properly reported.
Information Needed for 1099 Compliance
To ensure accurate reporting of payments to lawyers, payers must collect specific information from the legal professional. This process typically involves a standardized IRS form. The information gathered allows payers to correctly prepare and issue the necessary 1099 forms at year-end.
Form W-9, Request for Taxpayer Identification Number and Certification
Form W-9 is essential for 1099 compliance. Payers require lawyers, as independent contractors, to complete and submit this form before services are rendered or payments are made. The W-9 collects essential identifying information: the lawyer’s legal name, business name (if applicable), address, and Taxpayer Identification Number (TIN). For individuals, the TIN is typically their Social Security Number (SSN); businesses use an Employer Identification Number (EIN).
The W-9 also includes certifications regarding TIN accuracy and whether the payee is subject to backup withholding. By providing a completed W-9, the lawyer confirms their tax identity, enabling the payer to report payments to the IRS. The payer retains the W-9 for their records and does not send it to the IRS.
Reporting 1099 Income on Tax Returns
Lawyers who receive 1099 forms must accurately report this income on their tax returns. The method of reporting depends on the business structure under which legal services are provided. All income must be reported, even if a 1099 form was not issued for certain payments.
Schedule C, Profit or Loss from Business (Sole Proprietorship)
Most lawyers operating as sole proprietors, or as single-member Limited Liability Companies (LLCs) taxed as sole proprietors, report their 1099-NEC and 1099-MISC income on Schedule C (Form 1040). On Schedule C, lawyers list gross receipts from legal services and deduct eligible business expenses, such as office rent, professional development, and malpractice insurance. The difference between gross income and deductible expenses results in the net profit or loss from the business, which is then carried to their individual Form 1040.
Income reported on Schedule C is subject to self-employment tax, which covers Social Security and Medicare taxes for self-employed individuals. Lawyers can deduct one-half of their self-employment tax in calculating their adjusted gross income.
Partnerships and S Corporations
Lawyers who are partners in a law firm structured as a partnership, or shareholders in an S corporation, report their income differently. The partnership or S corporation receives the 1099 forms. The entity reports its total income and expenses on its own tax return (Form 1065 for partnerships or Form 1120-S for S corporations). The lawyer’s share of the income or loss is passed through on a Schedule K-1, then reported on their individual Form 1040. This K-1 income is subject to self-employment tax for partners, while S corporation shareholder distributions are not.