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All About 1099 Tax Forms
All About 1099 Tax Forms
What is a 1099 form? What is a 1099 form used for? Who gets a 1099 form? What is 1099-K and do I need it to file my taxes? Do LLCs receive 1099 forms? These questions are common if you’re self-employed and tax filing season is close. April 15 is the official tax deadline for US taxpayers and taking the time to avoid IRS penalties isn't the only reason to take stock of your tax situation.
Taxes become more complicated when you have multiple income sources. This can mean W-2 wages from a full-time job or income from non-employee sources, also called 1099 income. And where there are taxes, there are forms. So if you’re here to understand what 1099 tax forms you need for the next tax season, you’re in the right place.
Table of contents
Key takeaways:...Read more
What’s a 1099 form?...Read more
What is a 1099 used for?...Read more
Who gets a 1099 form?...Read more
What is the 1099-K form?...Read more
Form 1099-MISC...Read more
What is the 1099-S form?...Read more
How do I file my 1099 taxes?...Read more
Important dates for independent contractor tax form filers...Read more
How to save money on your 1099 taxes?...Read more
Do LLCs receive 1099 forms?...Read more
W-2 vs 1099 forms: What’s the difference?...Read more
Can you track 1099 forms?...Read more
1099-S vs 1099-K vs 1099-MISC forms...Read more
Key takeaways:
- Independent contractors need 1099 forms to pay self-employment taxes.
- 1099-S is used to report real estate sales and exchanges while Form 1099-K is used to report payments from third party or credit card systems.
- There are many types of 1099 forms, all of which you can find on the IRS website.
What’s a 1099 form?
1099 forms are information sharing forms sent to the IRS by the company or individual that paid non-employee compensation to another company or individual, essentially someone who's not on your payroll.
The business that pays you fills out the appropriate 1099 form for independent contractors with the necessary details and sends copies to you and the IRS. This tax 1099 form reports payments made during the tax year. In some cases, a copy is also sent to your state taxing authority.
The payer is responsible for completing the correct 1099 form for independent contractors and sending it to you. The IRS mandates that payers provide most 1099 forms by January 31, although in certain situations, the deadline is extended to February 15.
What is a 1099 used for?
You’ll use your 1099 form 2024 to figure out how much income you received during the year and what kind of income it was. This tax form provides key 1099 details that help you report the income correctly on your tax return. Depending on the type of income, such as interest, dividends, or payments for freelance work, you’ll enter the information in different sections of your return.
Who gets a 1099 form?
You’ll get a 1099 form if you’ve earned income from sources other than a regular job where you're an employee. For example, if you’re an independent contractor, you’ll typically receive a 1099 form for independent contractors (specifically, a 1099-NEC) from any clients who paid you $600 or more during the year. This form shows how much they paid you for your services.
In other cases, you might receive a 1099-MISC form for other types of payments, like rent, prizes or legal settlements. Both forms are important to pay tax as a 1099 worker.
What is the 1099-K form?
If you received $20,000 or more in business income or payments for goods and services via credit card or a third-party payment system (such as Venmo or Cash App) from more than 200 transactions in 2023, you should have received a summary of those payments on a Form 1099-K. So if you earned income from eBay from selling items online, eBay will report the payments it makes to you to the IRS using the 1099-K form.
The IRS had originally planned to lower the reporting threshold for the 1099 tax form in the 2023 tax year to $600 but announced on November 21, 2023, that it would delay and revise the implementation of this rule. A new phase-in threshold of $5,000 is now planned for the independent contractor tax form in tax year 2024 (for taxes filed in 2025).
Form 1099-MISC
It's no news that you'll have to pay taxes on your income from sources that are not a full-time employer, such as contract freelance work or rental income. These are reported using different 1099 forms, which have the information you'll use to pay 1099 taxes on this income.
One form for reporting 1099 taxes is the 1099-MISC form, which is used to report miscellaneous income. If you receive certain payments for your trade or business that aren’t related to nonemployee compensation and exceed specific amounts, those payments will typically be reported to you on the 1099-MISC form. For instance, if you earn at least $10 in royalties or receive broker payments instead of dividends or tax-exempt interest, you’ll see them on this 1099 form.
You’ll also get a 1099 MISC form if you receive $600 or more for items like rent, prizes and awards, or other income payments. If a business withholds federal income tax on your behalf under backup withholding rules, you should also receive a 1099 MISC form, regardless of the amount withheld. Additionally, if you make direct sales of $5,000 or more, those will be reported on either the form 1099-K. If you receive 1099 forms in 2024, make sure it’s in your hands by January 31.
There are also plenty of other 1099 income sources on which you'll be taxed, like income from interest. For example, if you give someone a loan and receive interest in return, you'll need to report this income to the IRS using the 1099-INT.
What is the 1099-S form?
When it comes to real estate transactions, you’ll likely encounter the 1099-S form. This form is used to report the sale or exchange of real estate, including land and any buildings or improvements on it. If you sold a property, whether it’s your primary residence, a rental, or an investment, the entity handling the transaction, like a title company or real estate broker, will send you this 1099 tax form.
You’ll receive the 1099 form in 2024 if the gross proceeds from the sale are $600 or more. The form will detail important information, including the sale price and the date of the transaction, which you’ll need for your tax return. It’s essential to keep this 1099 tax form on hand, as it helps you report any capital gains or losses from the sale.
How do I file my 1099 taxes?
To file your 1099 taxes, look in your bank statements or any 1099 tax forms you received from the companies or clients that used your products or services. The 1099 tax forms usually arrive through the mail during the start of a new year, listing the payments for the previous year.
The 1099 tax forms you receive will show you the income earned during the year and help you accurately calculate the tax you owe. In addition, the IRS has an online tool called "Get Transcript" that allows individuals to view and download their past tax transcripts, which will also include information about their 1099 income.
You can also speed up your 1099 tax filing with FlyFin. It's an intelligent AI app that automatically finds your income and business expense deduction from your account and saves you a lot of money on taxes. CPAs also handle the entire tax prep and filing process and offer unlimited tax support on the app.
Important dates for independent contractor tax form filers
Self-employed individuals and independent contractors are required to make quarterly estimated tax payments, with deadlines on April 15, June 17, September 16 and January 15 of the following year.
But unlike the individual filing date, the deadline for filing 1099 tax forms with the IRS for the 2024 financial year is Jan 31, 2025, and the tax deadline for filing individual tax returns is April 18. If you need more time to file, you can request a tax extension tol give you an additional six months to file your return.
How to save money on your 1099 taxes?
One of the most effective ways to save money on your 1099 taxes is to take advantage of business expense tax deductions, such as deducting the cost of office supplies, equipment and travel expenses.
The only catch here is that the expenses you claim as self-employment deductions must be from your primary source of income. For example, if you work as a freelance graphic designer, and this work makes up more than 80% of your yearly income, this will be considered your main work. If you do something else occasionally like freelance photography gigs, you can only deduct business expenses associated with your graphic design activities.
Apart from 1099 forms, independent contractors also need Schedule C to report their business deductions and Schedule SE to calculate quarterly tax payments.
One of the best ways to save money on taxes when it's time for annual filing is by using expert CPAs to maximize your savings on taxes. FlyFin's CPAs take care of 95% of the work for you, preparing and filing your federal and state taxes directly through the app with 100% accuracy.
Do LLCs receive 1099 forms?
LLCs can receive 1099 forms, but it depends on how the LLC is taxed. If your LLC is treated as a sole proprietorship or partnership, and you’ve provided services to clients, you’ll likely receive a tax form for 1099 workers if you've earned $600 or more. This form works the same as the one issued to independent contractors.
If your LLC is taxed as an S corporation or C corporation, you typically won’t receive an independent contractor tax form, unless it’s for specific payments such as legal services.
W-2 vs 1099 forms: What’s the difference?
The key difference between W-2 vs 1099 forms is how you earn and report your income. If you’re an employee, you’ll receive a W-2 form from your employer. This form reports your wages, taxes withheld, and other payroll information for the year. Your employer automatically withholds taxes from your paycheck, including Social Security and Medicare.
On the other hand, if you’re self-employed, you’ll likely receive a 1099 form in 2024. Specifically, you may get a 1099-NEC if you're an independent contractor, which is also known as an independent contractor tax form. This form shows how much you were paid for your services, but unlike a W-2, no taxes are withheld. It’s your responsibility to report this income and pay estimated taxes throughout the year if your liability is estimated to be over $1,000.
Can you track 1099 forms?
You can definitely track your 1099 forms to ensure you’ve received everything you need for tax filing. If you’re expecting a 1099-MISC form or any other type of 1099 (like a 1099-NEC or 1099-K), it’s important to stay organized.
One way to track 1099 forms is by keeping a record of who you worked for and how much they paid you throughout the year. Businesses are required to send out 1099 forms by January 31, so if you haven’t received them by early February, you should follow up with the companies that owe you one.
You can also check your mail and email carefully, as many companies send these forms electronically now. If a form is missing, don’t hesitate to reach out to the payer, or even consider using tax software that allows you to track 1099 forms you expect.
1099-S vs 1099-K vs 1099-MISC forms
When it comes to 1099 forms, it’s important to understand the differences between 1099-S, 1099-K, and 1099-MISC, as each serves a specific purpose for reporting income.
- 1099-S: This form is used to report the sale or exchange of real estate. If you sold a property, whether it’s your primary home or an investment property, you’ll likely receive a 1099-S. This form provides important details like the sale price and the date of the transaction, which you’ll need for your tax return.
- 1099-K: The 1099-K form is issued to report payments made to you through third-party payment networks, like PayPal, Venmo, or credit card transactions. If you receive $600 or more in a calendar year, the payment processor will send you this form. It’s particularly relevant for individuals running a business or those who sell goods and services online.
- 1099-MISC: The 1099-MISC form is used to report various types of income that aren’t covered by other 1099 forms. This includes payments like rent, prizes, awards, and other income. You might receive this form if you earned at least $600 for services or other qualifying payments during the year.
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