What is a 1099 form?
A 1099 is a United States tax form that records money sent between two entities that do not have an employer-employee relationship. In less technical terms, a 1099 form keeps track of income you received from a company or person who is not your employer. For companies, it keeps track of money sent to non-employees.
Who gets a 1099 form?
Anyone who receives more than $600 in non-employee compensation gets a 1099 form. So, if you pay a contractor $500, you do not need to send them one. However, if you pay them $1,000, you need to send one.
If you pay under $600, you’re still allowed to provide a 1099, but you don’t need to.
That said, 1099s aren’t only used to report non-employee compensation — that’s only one type of 1099. For example, you may also receive a 1099 from your stock broker if you made money on your investments. Many other people will need to submit 1099s for various purposes, but you usually won’t receive one unless you have been paid over $600 in non-employee income.
What is a 1099 used for?
A 1099 is used for tax purposes. When businesses and individuals file their tax returns, they use 1099 forms to report their non-employee compensation.
However, 1099s can also be used for several other purposes, including reporting canceled debt, debt settlements, miscellaneous income, and more.
Types of 1099 forms
There are several common types of 1099 forms:
- 1099-A is used to report canceled debt, such as a canceled mortgage or a real estate short sale, which the IRS treats as income.
- 1099-B is used to report income from the sale of financial securities and bartering.
- 1099-C is used to report debt settlements, which are considered taxable events.
- 1099-INT is used to report income from interest.
1099-MISC is used to report miscellaneous income.
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