The 1099 form is a common one that covers several types of 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 types of 1099.
We’re here to review questions about the form, why you may receive it and what it would report for each situation.
Form 1099 questions and answers
If you’re wondering “what is a 1099 form?”, here’s the simple answer: different IRS 1099 forms report various types of income to the IRS. This is different than the income on your Form W-2.
For example, a Form 1099-NEC is used to report to each person who has been paid 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.
The types of Forms 1099 that you may encounter during the tax season are:
Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
Form 1099-DIV, Dividends and Distributions
From 1099-INT, Interest Income
Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Form 1099-MISC, Miscellaneous Income
Form 1099-NEC, Nonemployee compensation
Notice a pattern above? The first four 1099 form types all have to do with investing, while the bottom two forms cover income derived from rents, royalties, and nonemployee work. There are a few nuances to note there, so we’ve broken them up in two sections to outline what the 1099 is used for.
1099 forms for investment income
As mentioned above, you may or may not receive a 1099 form for a specific tax year. Your investment company or financial institution will look at your account activity for the year to determine 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 out of your retirement account last year, you won’t receive a 1099-R this year (we cover 1099-R below).
Form 1099-B is for reporting proceeds from securities transactions. Report securities transactions on Form 8949. If you have an account at a brokerage or mutual fund company, any Form 1099-B you receive might report:
- A single transaction
- Multiple transactions
You need this Form 1099-B information when preparing your return:
- Box 1a Description — This is a brief description of the asset sold. Enter this amount on your Form 8949.
- Box 1b Date of sale or exchange — This is the date the transaction took place. Use it as the sales date on your Form 8949.
- Box 1d: Stocks, bonds, etc. — This is the amount of money you received 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 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 are required to:
- Report the basis of the shares acquired and sold after 2010 on Form 1099-B
- Classify the resulting gain or loss as either short or long-term
For securities bought before 2011, firms can choose if they want to include the cost basis on Form 1099-B. If you don’t include it, you’re responsible for figuring your cost or other basis.
Form 1099-DIV is used for reporting income from stocks and mutual funds:
- Capital gain distributions
You need this 1099-DIV information when preparing your return:
- Box 1a: Ordinary dividends — Enter this amount on Form 1040 or on Schedule B (if required). It’s 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 at ordinary income rates.
- Box 2a: Total Capital gain distributions — Enter this amount on Form 1040 or Schedule D (if required). It might be eligible for a lower tax rate.
- Box 7: Foreign tax paid — This amount is taxes paid to a foreign government on international investments. You may be able to claim a foreign tax credit or itemized deduction on your Form 1040, Schedule A for this amount. It is best to choose the option that gives you the best tax advantage. Check with a tax professional if you are unsure of the best options.
Form 1099-INT is for reporting interest income received. You need this 1099-INT information when preparing your return:
- 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 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 two types of 1099 forms require you to report the income on Schedule C, which is typically subject to self-employment tax, or Schedule E.
1099-MISC Form is used to report many types of income. The main types usually require the use of additional forms on your return. The main types include:
You need this Form 1099-MISC 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,
- Extracting natural resources from your property.
You’ll receive a 1099-NEC (nonemployee compensation) for income you receive for contract labor or self-employment. Note: Prior to tax year 2020, this information was reported on Form 1099-MISC with Box 7 checked.
If you work for more than one company, you’ll receive a 1099 tax form from each company.
1099 forms and backup withholding
In certain circumstances, income reported on a Form 1099 may be subject to backup 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 assistance filing your 1099 forms, H&R Block can help. Whether you make an appointment with one of our knowledgeable tax pros or choose one of our online tax filing products, you can count on H&R Block to help you get back the most money possible.
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