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THE COMPLETE GUIDE FOR FREELANCERS TO:

IRS Form 1099

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Wondering what to do with the 1099 Form you received?

As a freelancer, gig worker or a self-employed person, a 1099 tax form is sent to you because you earned money from a non-employee source. There are a variety of 1099 forms, and it's useful to know a little about each. But the fundamental thing about a 1099 form is that it’s an information sharing form. It’s sent to the IRS by a company paying a self-employed individual for contract work or a product. The company will also send it to a self-employed individual for information purposes. For a self-employed individual, a 1099 form is not a required form to file the federal tax return but it does help you fill in your Schedule C accurately. Key Highlights: • A 1099 form is an information sharing form • A 1099 form reports payment information to the IRS by a company or individual that paid another individual for non-employee contract work • A 1099 form has many different version, used to report different kinds of income information
Here’s what the Form 1099 NEC looks like:
Image of Form 1099-NEC for reporting nonemployee compensation and direct sales. Includes payer and recipient information, taxes withheld, and state tax details.
The IRS 1099 Form is a way of reporting certain types of income. This important tax document details any earnings you received outside of the salary paid by an employer to the IRS. This practice promotes taxpayers to pay taxes on any income they made from contract work. For example, if you run a side hustle or are self-employed, you must pay and file taxes for this income. The IRS is informed by companies and third-party payment organizations like Venmo or PayPal, if they make payments to freelancer or independent contractors exceeding a certain threshold. For the 2022 tax year, this threshold for third-party payment companies is 200 transactions and $20,000. The IRS has decided to delay the implementation of the lower $600 threshold to 2024. As we all know, nothing is straightforward regarding the IRS. Since there are many ways to earn additional income, there are different types of 1099 forms that report different types of income. This article will help you understand everything you need to know about the 1099 tax form including what is a 1099 form, who gets a 1099 and how to get a 1099 form.

Table of contents

What is Form 1099?...Read more

What is the 1099 Form used for?...Read more

Criteria for getting a 1099 form and paying taxes on it...Read more

Types of 1099 Forms...Read more

What to do if you don’t get Form 1099?...Read more

How do you calculate taxes on 1099?...Read more

1099 benefits for different professions...Read more

What is Form 1099?

The 1099 tax form by the Internal Revenue Service (IRS) used to report certain income received during the year. Essentially this tax document is an information reporting form because it reports your income information to the IRS. This is the 1099 form an independent contractor or self-employed person uses.
Image explaining Form 1099, which reports income to the IRS. Sent by clients like Door Dash, Uber, Postmates to self-employed/freelancers for tax purposes.
This form is essential because it reports income that typically does not come from your employer, meaning any non-employee income earned. The IRS matches all 1099 and W-2 forms against your 1040 tax forms. If the IRS checks and the forms do not match, they will send out a CP2000 notice to you stating that you owe more money. A few examples of income outside a full-time job are income when you sell your used items on eBay, income from streaming on platforms like OnlyFans, Twitch, income from selling goods on Etsy, income from rent or interest.

What is the 1099 Form used for?

Simply put, the 1099 tax form reports income to the government. Since there are many different types of incomes and ways that income is taxed, the IRS provides several versions of 1099 tax forms for each type of income. These forms help freelancers know what income to report for the tax year. For example, the Form 1099-INT is used to report income from dividends or stocks, earned interest of more than $10 and any money received from the government or real estate transactions.

Quick tip

If you don’t get a 1099 form by February even after expecting one, you can simply refer to your bank statement to find the taxes you owe.

Criteria for getting a 1099 form and paying taxes on it

You might be wondering how to get a 1099 form and when 1099 forms are issued. Some taxpayers receive Form 1099 in the mail, usually in February. If you expected a 1099 form but haven't received it from the client, you can contact them or report the taxes on your own. If you paid someone for contract work and want to report those payments to the IRS you can go to your local office supply store or accounting firm to get these forms. The forms are also available on the IRS website. There are different criteria based on who gets a Form 1099. For example, you might get a 1099 Form in the mail if you:
Image describing when to expect a Form 1099 in the mail. Keywords: employment compensation, royalty payments, rent payments, state tax refund.

What is non-employee compensation anyways?

Types of 1099 Forms

Understanding 1099 tax forms can be challenging. There seem to be countless forms, each with very different instructions and criteria. There are over twenty different types of 1099s! But don’t panic; only a few are essential for you to know and understand.

Form 1099-NEC

Form 1099-MISC

Form 1099-K

Form 1099-INT

What to do if you don’t get Form 1099?

Typically, you should receive your 1099 tax form in the mail in early February. In some cases, you might not receive your 1099. If you didn’t receive a 1099 form even after you satisfy a criteria don’t panic. You can simply refer to your bank statements. It’s better to report the income on your own. It might require some work by going through your bank accounts, profit and loss statements and possibly any cash tips you’ve earned. Then enter this information on your Schedule C. You can use FlyFin to find your income and expenses automatically in minutes.

How do you calculate taxes on 1099?

The taxes on your 1099 income is calculated like any other income. You just add up all the income from different sources and then check your income tax bracket. You can use IRS tax rates for different income brackets to find your tax liability. This is from your income tax only, but if you are a self-employed individual, you also have to pay Self-Employed Care Act (SECA) tax. As someone self-employed, it is your responsibility to pay the self-employment tax. Usually, employers split the 15.3% rate, where the employer pays half and the employee pays the remaining half. However, as a freelancer, it’s now your responsibility to pay the 15.3% in its entirety. The good news is that only your net earnings are subject to self-employment taxes. This means your gross income minus any business write-offs. You can also deduct 50% of the total SECA tax from your income to further lower your taxable income. This is because the employer's share can be marked as a business deduction.
Image shows a tax summary with total tax of $21,473. It includes federal income tax, state income tax, and self-employment tax. Relevant for self-employed, 1099, and freelancers.
Calculating the total tax amount on your own is a long process, but get help with deductions by using a 1099 Tax Calculator to calculate your taxes for you.

1099 benefits for different professions

While working as a freelancer, you can take advantage of tax deductions to reduce the amount of taxes you owe. You can also use different tactics to lower your tax liability, also permitted by the IRS. For example, if you contribute more to a retirement savings plan, you can reduce how much self-employment tax (Social Security and Medicare) you owe. In addition, independent contractors may qualify for certain tax deductions that can lower their tax bill. Deductible expenses include home office expenses, business travel expenses and office supplies. Also, 1099 contractors are allowed additional tax deductions called a 20% pass-through deduction, enabling you to deduct 20% of qualified business income.

1099 G form

The 1099-G form is used to report payments made by governments to individuals. Unemployment compensation should be reported on Schedule 1 (Form 1040).

1099 SA form

The 1099-SA form is an informational form that reports distributions from your health plan. This is filed on Form 8889 or Form 8853 and attached to Form 1040.

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

Form 1040 Schedule SE

SE stands for self-employment tax, and this is where people who make a living working for themselves or freelancing pay Social Security and Medicare taxes.

Form 8829

If you use your home for work, you can deduct things like utilities and supplies used for your home office or storage space used for inventory from your taxes. Use this form to figure out how much you can deduct.

Losing a 1099 form

If you've lost a 1099 that was sent to you, fear not. Here's what you can do if it happens.

Form 1099-NEC

Entities that pay you for services as a freelancer or independent contractor report those payments to the IRS using this 1099 form.

Form 1099-MISC

Entities that give you other forms of income as a freelancer or independent contractor, such as prize money or money for healthcare, report those payments to the IRS using this 1099 form.

Avoid 1099-Misc

There are ways to lower the amount of tax you pay as a 1099 self-employed individual. Here are five proven strategies.

Form 1099-K

If you receive payments of $600 or more as a self-employed individual through credit card companies and payment services like PayPal, they report those payments to the IRS using this 1099 form.

Paypal

Here's how to receive a 1099-K from PayPal and how to use it to file and pay your 1099 taxes.

Shopify

Here's how to receive a 1099-K from Shopify and how to use it to file and pay your 1099 taxes.

Venmo

Here's how to receive a 1099-K from Venmo and how to use it to file and pay your 1099 taxes.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

1099 A form

The 1099-A form is received when an owned property has been foreclosed. This form is reported on Schedule D after calculating capital gain or loss.

1099 B form

A 1099-B form is an informational return form for recording the sale of investments by brokerages. This is reported on Form 8949 and Schedule D.

1099 G form

The 1099-G form is used to report payments made by governments to individuals. Unemployment compensation should be reported on Schedule 1 (Form 1040).

1099 SA form

The 1099-SA form is an informational form that reports distributions from your health plan. This is filed on Form 8889 or Form 8853 and attached to Form 1040.

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.
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