The 1099s: Understanding the Basics of a 1099 Form

May 22, 2019

No one is ever ready for tax season, even though it keeps coming every year around the same time.

If you’re bewildered on a yearly basis regarding the actual nature of 1099 tax forms you keep receiving, no worries, we’ve got it covered.

If you’re wondering what is a 1099, keep on reading for the all the basics!

What Is a 1099 Form?

A 1099 Form is — simply put — a record of an entity or person that aren’t your employer who have paid you money.

The traditional way of keeping records for these sorts of transactions is the 1099 form, generated from the payer, who will send copies to both you and the IRS.

Other cases of 1099 issuing entities are your personal bank paying you interest on your savings, your IRA institution, or even your state because of your tax refund from last year.

If you’re a freelancer, chances are that you’ll get some 1099s from your clients.

And if you’re a small business owner who happens to employ freelancers, then make sure to click here to generate the required 1099 forms.

Regardless of your 1099’s source, the form will have either your Social Security number or taxpayer identification number on it, so the IRS knows about these sources of income and will expect you to report them on your tax return.

However, simply receiving a 1099 doesn’t automatically mean that you owe taxes on that income as there might be deductions that’ll offset that money.

Types of 1099 Tax Forms

Same with different 1099 form issuers, there isn’t just one 1099 tax form that is unified across businesses and industries.

Check out these common types of 1099 tax forms and match them to your sources of income.

1099-A

You might get this form if you had a short sale of your house or your mortgage lender canceled some or all of your mortgage.

While the cancelation of debt doesn’t inherently seem like income per se, in the eyes of the IRS, it is a type of taxable income.

1099-B

This form comes from the sale of securities.

There are many types of securities, as well as some forms of bartering conducted through bartering exchanges online or otherwise.

1099-C

If you had debt that was settled through your credit issuer or other lenders, the IRS sees that amount as taxable income.

There is a high probability that you’ll have to report it via the 1099-C.

1099-DIV

If you own shares and received dividends this year, you’ll probably get a 1099-DIV.

Traditionally, this form is issued through a limited corporation.

1099-INT

This is a little similar to 1099-DIV form, but it’s concerned with the types of financial institutions that are not corporations.

In this case, this form will report earned income more than $10 from a bank, brokerage, or financial institution.

1099-G

If you had a tax credit, or refund, or any sort of money from the local, state, or federal government, then you’ll probably find a 1099-G coming your way.

This form follows the same concept of the 1099-C where a settled debt is considered taxable income.

Ready to Slay Your Tax Returns?

It’s never too early to read up on your tax forms and prep for tax filing season.

Now that you know what is a 1099, you’re in a way better place to keep your paperwork in order.

Still not feeling confident in your tax-filing prowess? Check out our top tax tips for your small business and much more about entrepreneurship!