1099 Income
1099 Income

What is an IRS 1099 Form? (Definition & Form Differences)

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At tax time, one of the forms that you might run into is the 1099 Form. The IRS uses this form to distinguish different types of income that may not come to you as part of a regular job. When you aren’t issued a W-2 for your income, chances are that you will be issued a 1099. Those who have paid you are responsible for issuing the 1099 as long as you made over $600.

You should keep your 1099 with your tax records and reconcile it with your own records. Additionally, realize that, even if you don’t receive a 1099 from a payer, you are still responsible for reporting the income to the IRS. Payers are supposed to send a copy of the 1099 to the IRS, so even if you are overlooked, there is a good chance that the IRS has a copy of the 1099.  You should receive your 1099s by January 31.  If you don’t receive your 1099s by then, you should call the payer and request it.  In addition, if your 1099s are incorrect you should also request that the payer issue a corrected 1099.  If they still do not correct the 1099, you should notify the IRS and also follow our instructions in “Missing Your W-2 Form, Corrected W-2s, and Multiple W-2s“.

Types of 1099s

The 1099 series of forms have different versions, each for a variety of purposes. The 1099-INT form is used to report interest income. Your bank or other financial institution might issue a 1099-INT form if you received interest income from a CD, or from a deposit account. If you have received debt forgiveness on a loan, this is considered income, and you will be issued a 1099-C. Income proceeds from real estate transactions make use of the 1099-S.

Several other 1099 forms exist for transactions such as Social Security benefits, distributions from cooperatives, government payments and more. However, one of the most common 1099 forms that you are likely to see is the 1099-MISC. This is the form that independent contractors receive from those who have paid them. If you work as a freelancer, you will receive a 1099-MISC form showing what you were paid. However, if a payer hasn’t paid you at least $600 in the past year, you might not get a 1099-MISC – but you still have to report your income.  For a comprehensive list of types of 1099s, click on our “What is a 1099 Form?” blog post.

The New 1099-K

Of interest to many people right now is the new 1099-K form. This new form will be issued, starting with sales in 2011, by banks and other payment processors, to report gross receipts of payments. This includes payments received via PayPal. So, those who use PayPal, accept credit cards, and sell on eBay will have their income reported, officially by payment processors, to the IRS. We expect the IRS to move forward with the over $600 reporting threshold for 2023 and the upcoming filing season unless Congress passes a law to change the requirement.

It is worth noting, though, that not everyone in this situation will be hit with the new paperwork. If your total payment transactions are less than $20,000, and there are less than 200 transactions, they won’t have to be reported on the 1099-K. Technically, you should be reporting the income anyway, but this move is meant to help better enforce it.

Beware double reporting. You will need to make sure you have good records, though. Although the new reporting requirements shift the reporting responsibility from the customers to the merchants and banks, customers may not make the distinction and could report the same transactions twice. Also, realize that payment processors and other 1099-K reporters won’t subtract out charge-backs and fees – they only report gross receipts.

Instead of relying on 1099s for information about your income, you should keep good records. That way, if the IRS asks for information on the way you offset your income with expenses, or the double reporting issue, you have what you need to back up your position. As part of your due diligence, you should always keep a reconciled bank account for your business where you can track your income and expenses.  In the end, you are responsible for paying your taxes based on what you were paid. If you underpay, the IRS will find out. If you overpay, the IRS may never know!

25 responses to “What is an IRS 1099 Form? (Definition & Form Differences)”

  1. which version of Turbo Tax has support for importing MLP’s K1 forms into tax software to fill the necessary forms for 2015 tax filing ?

    • Hi Raja,
      If you are expecting K-1s you would need TurboTax Premier or TurboTax Home and Business.
      Thank you,
      Lisa Greene-Lewis

  2. I made 6 thousand for 4 months rental income. I paid property taxes of $3,300. With no loan interest to write off. Thats all the income I had. AARP says I do not need to file taxes at all as not enough income to reach the threshold for taxation. Is that correct? I feel strange not filing. Thanks

    • you really should file to prove to the irs just how much you made. since they don’t know how much money you made youre just going to let them know you are below filing requirements.

  3. I give out grants from a non profit organization. Do the recipients of these grants get a 1099? The grant should not be taxible to them.

  4. Your Question:

    A rent stabilized tenant was offered payment to not renew her lease. The premises were strictly residential and not used in any trade or business. She accepted and vacated the premises when her current lease terminated. she received payment, which was reported to her (and the IRS) by the owner/managing agent on a 1099-MISC as ordinary income (box 3, “other”). She claims this should have been capital gain, not ordinary income, but in that case, shouldn’t it be reported on a different 1099? Which is correct? Thanks!

  5. I received a settlement from a law suit. In the agreement it was designated that a portion of the monies was for past wages and the remainder for pain & suffering & emotional distress. Should I request that they provide me with 2 1099’s so I can claim the one for income? And what kind of 1099’s do I ask for? Mics. for the 1 regarding past income, what about the other for pain, suffering etc?

  6. Good afternoon,
    This year I have purchased Medical equipment for some of my customers from the company I sell for. I resold this equipment at a lesser value then what I purchased it for in some cases. The purchasers of the equipment issued me 1099-misc forms at the discounted price. What forms do I need to file for this adjusted income? Thank you

  7. I am a finance operator at a car dealership. I earn a percentage of sales from all warranty products and other additional services that are sold to client when they purchase a car. If the client sells or trades their car prior to the term of the warranty product they purchased, I am charged with percentage that was issued to me earlier (called a chargeback). Where do I report this information in the turbo tax program? I have $21, 000 in chargebacks for 2012 that needs to be deducted from my w-2

  8. If the company paid you more than $600, they should issue you a 1099. Either way, you are responsible for reporting that income on your return. You are not responsible for filing the 1099 itself.

  9. I have done mystery shopping and need to report the income will the company(s) that I received payment from mail me a 1099 form or am I responsible for all the paperwork? Thanks

    • If the company paid you more than $600, they will issue you a 1099 form. Either way, you will need to report that income on your tax return. You won’t have to worry about filing a 1099 though, that would be their responsibility.

  10. I run a Childcare and am partially paid by the county. When I import my business into turbotax, those payments are added into my income. Then when I enter the 1099 misc forms that were sent to me by the county, am I double taxed? The amount that I owe goes up on Turbo tax. What do I do?

  11. I will be working as a independent computer consultant on 1099; I will receive my salary every 15 days.I will be working 40 hours/week and I will be getting $60/hour. Q1: do I need to pay taxes every 15 days, or monthly or qtrly? Q2: do you know any software which will determine my expenses, Federal, FICA, Social Security and State taxes and I can pay taxes online? Q3: do I need to file any other taxes?

  12. Do I have to file a 1099 when I have sold products BUT have returned 90% of the products? The company I sold products for still owe me about $1300.00, which I haven’t received back.

    • Hi Marie,
      Unfortunately, you do still have to file your 1099, as the company reports the same amount on the 1099 to the IRS. TurboTax will guide you through the entries for business.
      Thank you,
      Lisa Greene-Lewis

      • Hi TurboTax Lisa,
        I received a 1099 with NO letter after it. Does that mean it is just info sent to the IRS, and I don’t need to enter it anywhere into TurboTax?

  13. My wife received a 1099k from PayPal. How does she deduct her expenses so she is not taxed on the full amount? Which Turbotax should she us to file?

    • Hi Tom,
      Are you saying you received a form 1099-int and you need to put the info on your tax return? If so, TurboTax will guide you through entering the proper information and put that info on the proper form on your tax return.
      Thank you,
      Lisa Greene-Lewis

      • Can I just say what a relief to find soneome who actually knows what theyre talking about on the internet. You definitely know how to bring an issue to light and make it important. More people need to read this and understand this side of the story. I cant believe youre not more popular because you definitely have the gift.

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