Form 1099: Definition, types, who gets one, and what do with it

The 1099 form is a common IRS form covering several potentially taxable income situations. Depending on what’s happened in your financial life during the year, you could get one or more 1099 tax form “types” or even more than one of the same 1099 forms.

We’re here to review tax information and questions about the form, why you may receive it, and what the form would report for each situation.

What is a 1099 Form?

There are so many tax forms out there, so you may be wondering, “What is Form 1099?” here’s the simple answer: different 1099 forms report various types of income to the Internal Revenue Service (IRS). This is different from the income on your Form W-2 (check out our post on 1099 vs. W2 for details).

For example, a Form 1099-NEC reports payments of at least $600 in nonemployee compensation, a form often sent to self-employed persons or independent contractors (sometimes called gig workers).

(Tip: If you’re new to gig work, check out our Guide to gig worker taxes and avoid tax-time surprises.)

Who gets a 1099 tax form?

It can get a little confusing to talk about the 1099 form generically. And here’s why: as we’ve hinted to above, there’s a suite of 1099 forms that apply to multiple types of income, ranging from investment income to self-employment. So, if you’re trying to figure out “Who gets a 1099?” the answer is, a lot of people — for a lot of reasons.  

The types of Forms 1099 that you may encounter during the tax season are:

What is a 1099 form used for?

Notice a pattern above? The first four types of 1099 forms involve investment income, while the rest cover income derived from rents, royalties, and nonemployee work.

There are a few nuances to note, so we’ve categorized them into two sections to outline what a 1099 is used for: 

• 1099 forms for investment income
• 1099 forms for non-investment income

Follow along as we guide you!

1099 forms for investment income

You may or may not receive a 1099 form for a specific tax year. Your investment company or financial institution will review your account activity for the year to see if you should receive a form. If you don’t have a certain type of income activity in that year, you won’t get that 1099 type.

For example, if you didn’t take money from your retirement account last year, you won’t receive a 1099-R this year. (We cover 1099-R below).

Form 1099-B

Form 1099-B shows proceeds from securities transactions. Use the information on Form 1099-B to fill out IRS Form 8949. If you have an account at a brokerage or mutual fund company, any Form 1099-B received might report a single or multiple transactions.

You need this information when preparing your tax return:

• Box 1A: Description — This is a brief description of the asset sold. Enter this amount on your Form 8949.
• Box 1C: Date of sale or exchange — This is the transaction’s date. Use it as the sales date on your Form 8949.
• Box 1D: Stocks, bonds, etc. — This is the amount of money you receive on the sale of your securities. Report it as the sales price on your Form 8949. The brokerage firm or mutual fund company usually reduces this amount by commissions. See the checkbox next to the Box 2a amount.

Some financial firms also provide information about the cost basis of the asset sold. You can use this information on Form 8949. Brokers and mutual-fund companies must report the basis of the shares acquired and sold on Form 1099-B and classify the resulting gain or loss as either short or long-term.

Form 1099-DIV

1099-DIV is used for reporting income from stocks and mutual funds from dividends or capital gain distributions. You need this information when preparing your tax return:

• Box 1A: Ordinary dividends — Enter this amount on Form 1040 or on Schedule B (if required). The amount shown is taxable at ordinary income rates.
• Box 1B: Qualified dividends — This amount shows the portion of Box 1A that’s taxed at a lower rate. Box 1A amounts aren’t always taxed as ordinary income rates.
• Box 2A: Total capital gain distributions — Enter this amount on Form 1040 or Schedule D (if required). Gains might be eligible for a lower tax rate.
• Box 7: Foreign tax paid — This amount shows taxes paid to a foreign government for international investments. You may be able to claim a foreign tax credit or itemized deduction on your Form 1040, Schedule A, for part or all of this amount. Choosing the option that gives you the best tax advantage is best. Check with a tax professional if you are unsure of the best options.

Form 1099-INT

Form 1099-INT is used to report interest income received. When preparing your income tax return, the following 1099-INT information will be helpful:

• Box 1: Interest income — Enter this amount on Form 1040 or on Schedule B (if required). It’s taxable as ordinary income.
• Box 2: Early withdrawal penalty — This amount is charged when you withdraw a time investment, like a CD, early. Enter this amount as an adjustment to income on Form 1040, Line 30.
• Box 3: Interest on U.S. Savings Bonds and Treasury obligations — Report this interest on Form 1040 or Schedule B (if required). It’s usually taxable on your federal return. It’s usually not taxable on your state return.

Form 1099-R

Form 1099-R is used to report distributions from pensions, annuities, retirement or profit-sharing plans, IRAs, and insurance contracts.

You may also receive Forms SSA-1099, RRB-1099, or RRB-1099-R from the Social Security Administration or Railroad Retirement Board to report the benefits you received during the year.

• Social Security benefits (and equivalent railroad retirement benefits) are reported on Form 1040, lines 6A and 6B.
• Railroad retirement benefits that are pension benefits are generally reported on Form 1040, lines 5A and 5B.

1099 tax forms for non-investment income

These next types of 1099 forms may require you to report the income on Schedule C, which is typically subject to self-employment tax, or on Schedule E.

1099-MISC

Form 1099-MISC tax form is used to report many types of income. The main types – like income from rents or royalties – usually require the use of additional forms on your return. Include this tax information when preparing your return:

• Box 1: Rents — Report real-estate rental income you receive on Schedule E. Report rent for personal property, like machinery, on Schedule C.
• Box 2: Royalties — Income you receive for:
  • The right to your work over a specified period of time, and
  • Extracting natural resources from your property.

1099-NEC

You’ll receive a 1099-NEC (nonemployee compensation) for income you receive for contract labor or self-employment of more than $600. Note: Prior to tax year 2020, this information was reported on Form 1099-MISC.

If you work for more than one company, you’ll receive a 1099-NEC tax form from each company.

1099-K

Using an app or online platform for payments? If you received over $20,000 of business income or payments for goods and services online through a third-party payment system or credit from more than 200 transactions, you’ll be sent of summary of those payments on a 1099-K.

The payments can be made through any:

• Payment app
• Online community marketplace
• Craft or maker marketplace
• Auction site
• Car sharing or ride-hailing platform
• Ticket exchange or resale site
• Crowdfunding platform
• Freelance marketplace 

The gross amount of each reportable payment transaction that a payment processor processes for you is often included in a Form 1099-K. You will get individual 1099-Ks from each payment processor documenting the payments you got if you meet the reporting threshold for that particular year from one or more payment processors or third-party payment enterprises. Sometimes, any changes for credits, cash equivalents, discount amounts, fees, returned amounts, or additional sums are not included in the total gross amount displayed on your 1099-K.

When are 1099s sent?

The 1099 form series has different deadlines when they are required to be sent. Below, you’ll see an overview of “required to be sent by” dates:

1099 forms and backup withholding

In certain circumstances, income reported on a Form 1099 may be subject to backup tax withholding. The payers of the income will do the following if backup withholding applies:

• Show the tax withheld on Form 1099, and
• Withhold tax at a rate of 24%, if any of these apply:
  • You don’t provide the payer with your tax identification number, like your Social Security number (SSN).
  • The Taxpayer Identification Number (TIN) you provide is incorrect.
  • The IRS notifies the payer that you’ve been underreporting interest or dividends.
  • You haven’t certified that you’re exempt from backup withholding.

Where to go for help with 1099 tax forms

If you’re looking for assistance with filing your 1099 forms, H&R Block can help. Need help claiming this tax benefit? Whether you choose to file online or want to file your taxes with a tax professional, we’re here for you.