Tax season starts January 29, which means you should start receiving your tax forms very soon. Be sure to pay close attention to anything marked as “tax information” and keep it in a safe spot until you are ready to file. Along with your Form W-2s, you may also receive some 1099s. These are used to report various types of income not included on your W-2. This includes interest income, dividends, prize money received, as well as other non-employee compensation. Although there are numerous types of 1099 forms sent, we’re going to take a look at the five most common types you are likely to receive.
5 Most Common 1099 Tax Forms
If you made money from a side hustle, a high-yield savings account, stocks, or mutual funds, you’ll probably receive one or more of the following 1099s this year.
1099-MISC
Before 2020, Form 1099-MISC was used to report non-employee compensation. Now, it’s primarily used to report miscellaneous compensation ($600 or more), such as rental income, prizes, awards, healthcare payments, and payments to attorneys. Depending on the type of income received, where you report it on your Form 1040 will vary.
- Box 1 – rents: any amount in this box should be reported either on Schedule E or Schedule C (Form 1040).
- Box 2 – royalties: use Schedule E (Form 1040) to report this income.
- Box 3 – other Income: this amount is reported on the “Other Income” line of Schedule 1 (Form 1040) unless it’s trade or business income. Then, it should be reported on Schedule C or F (Form 1040).
- Box 4 – backup withholding or withholding from Indian gaming profits: report this amount on your 1040 as tax withheld.
- Box 5 – fishing boat proceeds: report this amount on Schedule C (Form 1040).
- Box 6 – medical and health care payments: report on Schedule C (Form 1040).
- Box 7 – consumer products sold to you for resale: any income from the sale of those products must be reported on Schedule C (Form 1040).
- Box 8 – substitute payments: include these payments on the “Other Income” line of Schedule 1 (Form 1040).
- Box 9 – crop insurance proceeds: report on Schedule F (Form 1040).
- Box 10 – payments to attorneys: report only the taxable amount as income on your return.
- Box 11 – payments for fish: report this as income on your tax return.
- Box 12 – Section 409A deferrals:
- Box 14 – excess golden parachute payments: refer to your tax return instructions for where to report this amount.
- Box 15 – nonqualified deferred compensation: report this amount as income on your tax return.
You can also refer to the Instructions for Form 1099-MISC for additional filing information.
1099-NEC
In 2020, the IRS reintroduced Form 1099-NEC to replace the use of Form 1099-MISC for reporting non-employee compensation. You’ll typically receive a Form 1099-NEC if you earned $600 or more for work done as an independent contractor or freelancer (self-employed). Use the amount in box 1 of your 1099-NEC to report your self-employment income on Schedule C (Form 1040). This income may also be subject to self-employment tax.
1099-K
If you received money through a third-party payment network, such as PayPal or Venmo, a Form 1099-K may be in your future. Currently, these online networks are only required to file a 1099-K if you receive $20,000 or more in payments, but this will change in 2024. Next tax season, the threshold will be $5,000 as the IRS works to eventually get it lowered to $600.
It’s important to note that not all money reported on the 1099-K may be taxable. Payments received from friends or family for gifts or reimbursements need not be reported on your tax return. Money received for sale items or services rendered, however, should be reported on Schedule C (Form 1040).
1099-INT
Do you have a bank account or certificate of deposit (CD)? If you earned more than $10 interest during the tax year, be on the lookout for a Form 1099-INT. Your bank will send this form by January 31 by email or postal mail. You may also be able to download a copy from your online account.
If you receive a Form 1099-INT, you’ll need to include the amount in box 1 on the “taxable interest” line of your Form 1040. You may also be able to take a deduction on Schedule 1 (Form 1040) if you have any penalties in box 2. Box 4 will reflect any federal income tax withheld, which can either reduce your taxes owed or potentially increase your refund. If you have over $1,500 in combined taxable interest, you’ll also be required to prepare Schedule B.
1099-DIV
You may receive Form 1099-DIV if you have stocks or mutual funds. That’s because it’s used to report dividends and capital gains distributions. Enter your ordinary dividends from box 1a Form 1099-DIV on line 3b of your Form 1040. For qualified dividends in box 1b, enter those on line 3a of Form 1040. If your ordinary dividends exceed $1,500, you’ll need to file Schedule B, as well. For all other amounts entered on Form 1099-DIV, refer to the form instructions sent with it.
I’m Missing a 1099. What Should I Do?
When it comes time to file your taxes, be sure you have all your 1099s on hand. These should be mailed out no later than January 31. If you don’t receive yours, you’ll need to contact the payer or issuing agency to request a copy. You can also call the IRS at 800-829-1040 for assistance if you’re still waiting by the end of February. Make sure you have the following information available before making the call:
- Employer’s or payer’s name, address, and phone number
- Your Social Security number
- Dates of employment
If the filing deadline is near and you still don’t have your forms, you can either request a filing extension or use Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc., to estimate your wages and earnings. An amended tax return may be required, however, if the information on the 1099 differs from the estimate provided when filing.
Need Tax Filing Help?
Dealing with multiple types of income forms can be a bit confusing, but you don’t have to do it on your own. Depending on your income level, you may qualify for free assistance through IRS Free File. You can also reach out to a professional tax service, like Tax Defense Network, and get help filing your return. For a free consultation and quote, call 855-476-6920 today!