As tax season approaches, understanding the different types of 1099 forms is key to staying on top of your taxes—whether you're a business owner, gig worker, or simply someone receiving payments outside of a regular paycheck. In this guide, we’ll break down what each type of 1099 is, who needs to file it, and any important changes to keep top of mind this year.
A 1099 form is used to report various types of income that you receive outside of a traditional employer-employee relationship. While most employees receive a W-2, individuals who earn income from freelance work, side gigs, or other sources typically receive 1099 forms.
Here’s a closer look at the different types of 1099 forms and when you might receive them:
Who Receives it?
Independent contrators
Freelances
Gig workers
Why is it Important?
Form 1099-NEC is used to report income of $600 or more paid to non-employees for services. If you earned income from a client, business, or individual (excluding wages or salaries) for services provided, you'll likely receive this form. Examples include freelance writers, consultants, and contractors in various industries.
If you are a business owner that paid independent contractors, you will be responsible for preparing and remitting these forms to both the payees and the IRS.
What Recipients Need to Know:
The payer must send you the 1099-NEC by January 31,202
Generally, the income reported on the 1099-NEC must be included as income on your Form 1040, which is generally due by April 15, 2025 (unless extended)
Typically, 1099-NEC will be considered "self-eployment income" reputable on Schedule C and Schedule SE of your Form 1040 and may be subject to additional "self-employment tax" (up to 15.3%)
What Companies Need to Know:
If you’re a business owner who paid $600 or more to contractors, you’ll need to issue 1099-NECs to them and file it with the IRS by January 15, 2025.
Who Receives It?
Recipients of prizes and awards
Certain vendor
Property owners receiving rent payments
Attorneys
Why Is It Important?
Form 1099-MISC is used for miscellaneous income types that don’t fall under 1099-NEC. If you earned income of $600 or more in rent, legal settlements, or certain prizes/awards, you'll likely receive this form.
If you are a business owner that pays these types of income to landlords, attorneys, vendors, etc., you will be responsible for preparing and remitting these forms to both the payees and the IRS.
What Recipients Need to Know:
The deadline for sending 1099-MISCs to the recipients is the same as the 1099-NEC—January 31.
Depending on the type of income and the status of the recipient, these reportable payments may or may not be treated as self-employment tax, but in general, must always be reported on your Form 1040. .
What Companies Need to Know:
The deadline for companies to send the IRS 1099-MISCs varies:
Paper Filing: By February 28, 2025.
Electronic Filing: By March 31, 2025.
Who Receives it?
Gig workers and small business owners who receive payments through third-party payment networks (like PayPal, Venmo, Etsy, Uber, etc.)
Why Is It Important?
Form 1099-K reports payments you receive via third-party payment processors or online platforms. This form is used to report the income you earned from selling goods, providing services, or renting property through payment apps or online marketplaces.
Based on recent law changes, the IRS has dramatically reduced the reporting threshold, so it’s important to review the changes below!
New Changes
Under prior law, 1099-Ks were only reported if the gross amount of payments required to be reported via third-party payment exceeded $20,000 and the number of transactions exceeded 200.
However, the American Rescue Plan Act revised this threshold to $600! This now means that many gig workers and small business owners that didn’t previously receive Form 1099-K will be pulled into 1099-K reporting. The IRS has graciously phased in the new reporting threshold over the next three years:
Phased-in Reporting Threshold
2024: $5,000
2025: $2,500
2026: $600
Reportable payments made via these platforms are for goods, services, property rentals, and similar transactions—not personal transfers. Personal payments (such as gifts or money from family/friends) are not reported on a 1099-K.
If you receive a 1099-K when you shouldn't have, it’s important to review the form and ensure it's related to legitimate business transactions. If you believe it was issued in error, take the necessary steps to correct it.
What Recipients Need to Know:What You Need to Know:
The deadline for sending 1099-Ks is the same as 1099-NEC and 1099-MISC—January 31, 2025
Typically, these reported payments will generally be treated as self-employment income subject to self-employment tax.
If you received rental income or other miscellaneous payments, you may receive this form.For more details, check out the IRS’s guide to Form 1099-K.
What Companies Need to Know:
The deadline for companies to send the IRS 1099-Ks varies:
Paper Filing: By February 28, 2025.
Electronic Filing: By March 31, 2025.
Navigating the world of 1099s doesn’t have to be complicated. Whether you’re receiving or issuing 1099 forms, TaxNow has partnered with Tax1099 to help you file quickly and accurately. Tax1099 simplifies the process, ensuring you stay compliant with IRS deadlines and avoid unnecessary penalties.
1. Stay organized: Keep track of all income and payments throughout the year, including any payments made via third-party platforms.
2. Use technology: Tools like Tax1099 make filing 1099s easier. Tools like TaxNow allow individuals to access their Wage & Income transcripts, which will include 1099s and other third-party payments received.
3. Meet the deadlines: Don’t forget, the January 31 deadline to furnish 1099s to recipients is approaching fast. Get your forms submitted on time!
