Glossary

What is a 1099 form?

In the United States, IRS Form 1099 is used to report various types of payments made by businesses and individuals, excluding employee wages. These forms document income sources such as dividends, rents, royalties, and non-employee compensation, with each payer required to complete and submit a 1099 form for relevant transactions to the IRS by January 31 or February 15, depending on the form. Copies must also be sent to the payee and sometimes to state tax authorities.

The 1099-NEC form, for example, reports non-employee compensation over $600, crucial for independent contractors. Recipients must report this income on their tax returns, manage their tax responsibilities, and pay self-employment taxes, highlighting the distinction from traditional employees who receive W-2 forms with withheld taxes.