Whether you’re a small business owner or an individual tax filer, you may have heard a lot about 1099 forms. But what exactly are they?
What is Form 1099?
Essentially, 1099 tax forms are a series of documents the Internal Revenue Service (IRS) refers to as “information returns.” They are used to report various types of income you may receive throughout the year other than the salary you earn from your employer. This means if you’re a freelancer, contractor, investor, or even someone who received a one-time payment, you could be getting a 1099 form.
On this page, we’ll delve into the world of 1099 forms, breaking down the various types you might encounter as a payee. We’ll take a closer look at some of the more common 1099 forms, explaining their significance and the scenarios in which you might receive them. Whether you’re new to 1099s or looking to clarify your understanding before tax filing, this guide will go over everything you need to know.
Who sends Form 1099?
IRS Form 1099 is a reporting form sent to you by banks, brokerages, businesses, and other organizations that have sent you money during the year that may be subject to federal income tax. Those same organizations also send a copy to the IRS, so it’s important that you report all taxable income from your 1099 forms.
Types of 1099 forms
There are many different kinds of 1099 forms, each serving a specific purpose and covering different types of income. It’s possible you may receive more than one type of 1099 form depending on your tax situation. You may even receive the same type of 1099 form more than once, just from different payers.
Here are some of the 1099 forms you may encounter this tax season:
1099-A: Acquisition or Abandonment of Secured Property
If your bank forgives some or all of your mortgage, or if you sell your home for less than you owe (a short sale), you might get a Form 1099-A from your lender. When you don’t have to pay back the full loan, the IRS sees the forgiven part as money you made, and it’s typically considered taxable income.
1099-B: Proceeds from Broker and Barter Exchange Transactions
Form 1099-B is issued by brokers or barter exchanges and reports proceeds from the sale of stocks, bonds, or other securities. If you’ve sold any investments, you’ll receive this form, which details the dates of transactions, the amounts, and your resulting profit or loss. This information is needed for calculating capital gains or losses on your tax return.
1099-C: Cancellation of Debt
Much like Form 1099-A, Form 1099-C details canceled or forgiven debt. This could include forgiven credit card debt, discharged car or personal loans, and forgiven student loans. The IRS treats any canceled debt as taxable income. So, if your lender lets you off the hook for any part of your debt, that forgiven debt is something you have to report as income on your taxes. Form 1099-C sent by the lender will tell you how much of the debt was forgiven.
1099-CAP: Changes in Corporate Control and Capital Structure
If you’re a shareholder in a corporation that was either acquired or experienced a significant change in its capital structure, you might find yourself on the receiving end of a 1099-CAP form. This document is issued to shareholders who have received cash, stock, or other forms of property as a result of the corporation’s acquisition or restructuring.
Consolidated 1099 tax statement
A consolidated Form 1099 combines five separate 1099 forms into one tax reporting document. The tax forms you might see in this consolidated document are 1099-B, 1099-DIV, 1099-INT, 1099-MISC, and 1099-OID.
Your consolidated 1099 tax form will show all your reportable income and transactions for the tax year. It could include some or all of the following five forms:
- Form 1099-INT: Reports all interest income earned on bonds, CDs, and cash in your brokerage account.
- Form 1099-DIV: Reports dividends received from stocks, mutual funds, and capital gains distributions.
- Form 1099-B: Reports the sale, redemption, or exchange of securities such as stocks, mutual funds, CDs, or bonds.
- Form 1099-MISC: Reports royalty payments, rent payments, or broker payments in lieu of dividends, as well as other income totaling $600 or more.
- Form 1099-OID: Reports the original issue discount on corporate bonds, CDs, collateralized debt obligations, and government obligations.
1099-DIV: Dividends and Distributions
Form 1099-DIV is used to report any dividends and distributions you received from investments. If you hold stocks or mutual funds that pay dividends, you’ll get this form to report that income. Note that credit union share accounts are considered interest by the IRS and are reported on a separate form called 1099-INT— more on this form below.
1099-G: Certain Government Payments
If you got money from the government this year — for example, a tax refund, credit, offset, or even unemployment benefits — look out for Form 1099-G, which reports these types of payments.
1099-INT: Interest Income
If you earned more than $10 in interest from a bank or financial institution during the tax year, you’ll receive Form 1099-INT. This form reports any taxable interest income that must be reported on your income tax return. This type of form is common for those with savings accounts, certificates of deposit (CDs), or other interest-bearing accounts.
1099-K: Payment Card and Third Party Network Transactions
Form 1099-K records transactions from credit or debit cards and third-party payment networks. You might receive Form 1099-K if you worked a side gig and accepted payments through a third party such as Uber® or Rover®. You might even receive one from your crypto exchange if you dabbled in crypto trading or from a payment app like Venmo®, if you sent and received money to friends. In 2024, the IRS lowered the payment threshold, changing the filing requirements that they use to trigger a 1099-K, meaning many taxpayers may receive this form for the first time in 2025.
1099-LTC: Long-Term Care and Accelerated Death Benefits
If you got money from your long-term care insurance or as an early payout from a life insurance policy during the year, the insurance company will likely use Form 1099-LTC to report it. This helps keep track of these payments for tax purposes.
1099-MISC: Miscellaneous Information
Form 1099-MISC is used to report various types of miscellaneous income, including rent, prizes, awards, and other earnings not covered by other 1099 forms. In the past, a 1099-MISC form was also used to report nonemployee income, but this is no longer the case after the introduction of Form 1099-NEC in 2020.
1099-NEC: Nonemployee Compensation
Form 1099-NEC, which stands for nonemployee compensation, is specifically used for reporting payments to those who are not classified as employees. This includes freelancers, independent contractors, or any self-employed individuals. If you fall into any of these categories, you may get one or several 1099-NEC forms from your clients showing the amount paid to you throughout the tax year.
1099-OID: Original Issue Discount
Form 1099-OID reports a special type of interest from certain investments like bonds or certificates, similar to Form 1099-INT. It is typically used when bonds are sold for less than they’re worth at maturity. The difference between the selling price and the full price at maturity is called the original issue discount, which the IRS treats as taxable interest income. This income is reported on your taxes over the time you own the bond, rather than when you sell it.
1099-PATR: Taxable Distributions Received From Cooperatives
If you’re part of a cooperative and received $10 or more in patronage dividends, expect to get a Form 1099-PATR detailing those payments. This form shows how much money you got back from the co-op, and you’ll need to report it when filing your taxes.
1099-Q: Payments from Qualified Education Programs
Form 1099-Q reports 529 plan payments made to you, your child, or their school. But don’t worry too much about taxes on this money — as long as it’s spent on qualified school costs like tuition, you typically won’t owe taxes on it. However, you should still keep this tax form for your records.
1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
If you took distributions from your pension, retirement plan, profit-sharing plan, IRA, or an annuity, you might receive Form 1099-R. These payments are not always taxable either, such as with some tax-advantaged retirement accounts, so it may just be an informational document. If you took a loan from your retirement savings, it could show up on this form, as well as any permanent and total disability payments you received from a life insurance contract.
1099-S: Income Proceeds from Real Estate Transactions
When you are involved in closing a sale or carrying out a transaction involving real estate, the person in charge may provide you with Form 1099-S that details the earnings from the deal. However, it’s important to remember that the money you receive from selling your property, such as your home or any other real estate, isn’t always subject to taxes. Make sure you familiarize yourself with the tax implications of a sale beforehand so you know what to expect.
1099-SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
You’ll receive Form 1099-SA if you took certain healthcare payments. This includes distributions from your health savings account (HSA), Archer medical savings account (MSA), or Medicare Advantage MSA. Again, not all of these distributions are taxable; this form may just be for informational purposes. As long as you used the distributions to pay for qualified health expenses, you should not need to pay tax on them.
FAQs about Form 1099s
Do I still need to report income if I didn’t receive a 1099 form?
Yes. In many cases, you may not get a Form 1099. The income you received may be under the limit requirements for your payer to file the form, or it may meet some other exception. No matter the reason, you must report and pay tax on all income you receive. In the event of a tax audit, you must be able to show all income you made was reported.
How do I report my consolidated 1099 tax document in TaxAct®?
When reporting your consolidated 1099 statement in TaxAct, you’ll enter each Form 1099 one at a time as you e-file. Our interview questions will ask for information on your income, and our tax software will use your answers to determine which 1099 tax forms you need. We’ll then guide you through entering your total sales proceeds and other income information as necessary.