What Is 1099 Form?
A 1099 form is an IRS information return used to report certain types of income paid by a business to someone who is not an employee.
If you are asking what is a 1099 form, the short answer is this: it reports income paid outside of payroll to the IRS and to the recipient. The 1099 form meaning is simple. It tells the IRS how much income a business paid to a non-employee so the IRS can verify that the recipient reports that income on their tax return.
Businesses use 1099 forms to meet IRS tax reporting and income reporting requirements for non-employee income.
Who Receives a 1099?
A 1099 is issued to individuals or entities that receive reportable payments in the course of business.
Common recipients include:
- Independent contractors and freelancers
- Service providers and vendors
- Attorneys and medical providers
- Individuals receiving rent, interest, or dividend income
In most cases, who gets a 1099 depends on:
- The type of payment made
- The recipient’s tax classification
- Whether IRS reporting thresholds are met
Common Types of 1099 Forms
There are several types of 1099 forms, each used to report a specific category of income.
1099-NEC
Form 1099-NEC is used to report non-employee income for services.
Key facts:
- Applies to independent contractor payments
- Required when total payments reach $600 or more per year
- Reported in Box 1: Non-employee compensation
This is the most common 1099 tax form issued by small and mid-sized businesses.
1099-MISC
Form 1099-MISC reports miscellaneous income that is not reported on 1099-NEC.
Common reportable payments include:
- Rent over $600 (Box 1)
- Royalties over $10 (Box 2)
- Other income over $600 (Box 3)
- Medical and healthcare payments over $600 (Box 6)
Each box has its own income reporting threshold, so businesses must review box-level rules carefully.
Other 1099 Forms
Some 1099 forms must be filed at lower thresholds, or regardless of dollar amount. Examples include:
- 1099-INT – Interest income over $10
- 1099-DIV – Dividend income over $10
- 1099-R – Retirement plan distributions, regardless of dollar amount
- 1099-S – Real estate transaction proceeds, regardless of dollar amount
- 1099-B – Broker and barter exchange transactions, regardless of dollar amount
These forms support broader IRS tax reporting and compliance monitoring.
When Are 1099s Required?
A business is required to issue a 1099 when it makes reportable payments in the course of a trade or business, and the payment meets the IRS rules for the specific form and box being reported.
Key rules to know
- Requirements vary by form and box. There is no single universal rule for all 1099 tax forms
- $600 is common, but not universal. Some income types have lower thresholds (such as $10 royalties), while others are transaction-based
- Some forms require reporting regardless of dollar amount, including many retirement, real estate, and broker transactions
- Backup withholding can require filing even if the payment is below the normal threshold
How entity type affects 1099 requirements
Whether a 1099 is required can depend on the recipient’s tax classification, not just the payment amount.
- Individuals and sole proprietors commonly require 1099 reporting when thresholds are met.
- Partnerships often require 1099 reporting, depending on the payment type.
- LLCs 1099 requirements depend on how the LLC is taxed:
- Single-member LLCs taxed as individuals generally require 1099 reporting
- Multi-member LLCs taxed as partnerships often require reporting
- LLCs taxed as corporations may be exempt for certain payments
- Corporations payments to C corporations and S corporations are often exempt, but there are important exceptions, such as:
- Legal services
- Medical and healthcare payments
- Certain reportable transactions
This is why collecting a Form W-9 and following form-specific IRS instructions is critical. For more information on collecting W-9 forms, read here.
Common situations where a 1099 is generally not required:
- Personal payments not made in the course of business
- Payments made by credit card or third-party payment networks, which are generally reported on Form 1099-K by the payment processor
- Certain entity types, depending on the payment and form instructions
Because 1099 rules vary by form, box, payment type, and entity, businesses should always follow the IRS instructions for the exact 1099 form being filed.
When Are 1099s Due?
1099 deadlines include two separate requirements: furnishing forms to recipients and filing forms with the IRS.
Deadline to Furnish 1099 Forms to Recipients
Most 1099 forms must be provided to recipients by January 31 following the end of the tax year.
This includes:
- Form 1099-NEC
- Most Form 1099-MISC boxes
- Many other commonly issued 1099 forms
Providing forms on time allows recipients to correctly report income on their tax returns or inform you of any corrections needing to be made prior to filing.
Deadline to File 1099 Forms With the IRS
IRS filing deadlines depend on the form type and filing method.
- Form 1099-NEC:
- IRS deadline: January 31
- Applies to both paper and electronic filing
- Most other 1099 forms (including 1099-MISC):
- Paper filing deadline: February 28
- Electronic filing deadline: March 31
1099 Electronic Filing Requirement
Businesses that file 10 or more information returns total during the calendar year are generally required to file electronically.
This requirement:
- Applies across all information return types combined
- Is based on the number of forms, not dollar amounts
- Makes paper filing noncompliant once the threshold is met
How to File 1099 Forms Online
Businesses that file 10 or more information returns total during the calendar year are generally required to file electronically.
To file 1099 forms online, businesses typically:
- Collect recipient tax information using Form W-9
- Track payments by form type and box
- Prepare accurate 1099 forms
- Electronically file with the IRS and furnish recipients
Using an automated solution like eFileMyForms helps ensure accuracy, meet electronic filing requirements, and reduce correction risk.
FAQs
What is a 1099 used for?
A 1099 is used to report non-employee income paid by a business to the IRS and to the recipient.
Is a 1099 only for freelancers?
No. Freelancers commonly receive 1099-NEC forms, but many other individuals and entities receive different types of 1099 forms.
Do I need to file a 1099 for every contractor?
No. A 1099 is only required if payments meet the applicable IRS reporting threshold and no exemption applies.
What happens if I don’t issue a 1099?
Failing to file required 1099 forms can result in IRS penalties, notices, and additional correction costs.
Stay compliant without the complexity
File your 1099s easily using eFileMyForms.