Making a certain amount of cash from pursuing a passion or by having your own side gig means you owe taxes, according to the IRS. And the process of withholding taxes and knowing what figures to enter into your tax return isn’t the same as when you work for someone else. As an employee, you receive a W-2 form around Jan. 31 every year that shows the wages, tips and salary you received. But when you run a business — even part-time — there’s no such thing.
Instead, you need to become familiar with the information tax forms known as 1099s. The Internal Revenue Service requires certain 1099 forms be filed when you make or receive payment as a small business or self-employed individual. You’ll also receive 1099 forms which are necessary for your tax preparation. Here’s what you need to know to file your self-employment taxes.
1099 Forms at a Glance
Although there are many different 1099 forms, most taxpayers only need to be concerned with a few. For anyone required to pay self-employment tax, the 1099-MISC is the most common. You will receive a 1099-MISC form from customers reporting payments made to you, and you’ll also use the 1099-MISC form to report certain payments made as part of your business.
Other common 1099 forms include 1099-K — which relates to business sales using third-party payment processors, such as PayPal — and 1099-INT, which is used to report interest received from financial institutions. Here’s a table summary of the different 1099 forms with applicable tax filing dates and basic requirements for filing:
|1099 Forms||Types of Income Reported||Minimum Reporting Requirement||Date Due to Recipient||Date Due to IRS|
|1099-A||Acquisition or Abandonment of Secured Property (e.g., foreclosure or repossession)||All amounts||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-B||Proceeds from broker and barter exchange||All amounts||15-Feb, except trustees and middlemen of widely held investment trusts 15-Mar||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-C||Cancellation of debt||$600 or more||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-CAP||Changes in corporate control or structure||Over $1,000||31-Jan (shareholders) 5-Jan (clearing organization)||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-DIV||Dividends and distributions||$10 or more, except $600 or more for liquidations||31-Jan, except trustees and middlemen of widely held investment trusts 15-Mar||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-G||Certain government payments||$10 or more for refunds and unemployment||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-H||Health coverage tax credit||All amounts||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-INT||Interest income||$10 or more ($600 in some cases)||31-Jan, except trustees and middlemen of widely held investment trusts 15-Mar||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-K||Payment card||All amounts||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|Third-party network transactions||$20,000 or more and 200 or more transactions|
|1099-LTC||Long-term care and accelerated health care benefits||All amounts||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-MISC||Miscellaneous income (payments made in the ordinary course of business to someone not your employee) Note: Does not apply payments made to corporations, with the exception of medical and healthcare payments and fees paid to attorneys. These forms are only required for individuals, partnerships, limited liability companies treated as partnerships, and sole proprietors.||$600 or more for rents; prizes and awards (not for services); services performed by nonemployees and materials; other types of payments not covered by other forms||31-Jan for all, except 15-Feb for (1) gross payments to attorneys; and (2) substitute dividends and tax-exempt interest payments reportable by brokers. Note: 15-Mar for trustees and middlemen of widely held investment trusts||28-Feb (paper filing) 31-Mar (electronic filing) Note: if any payments for nonemployee compensation are reported in box 7, the due date is 31-Jan for both paper and electronic filing|
|$5,000 or more of consumer products to anyone for the purpose of resale(i.e., resale doesn’t occur in a permanent retail store)|
|$10 or more in royalties or broker payments, not including dividends or tax-exempt interest|
|All amounts paid to fishing boat crew members; income from nonqualified deferred compensation plans;|
|1099-OID||Original issue discount||$10 or more||31-Jan, except trustees and middlemen of widely held investment trusts 15-Mar||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-PATR||Taxable distributions received from cooperatives||$10 or more||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-Q||Payments from qualified education programs (under sections 529 and 530)||All amounts||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-R||Distributions from pensions, annuities, retirement or profit-sharing plans, IRAs, insurance contracts, etc.||$10 or more||31-Jan||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-S||Proceeds from real estate transactions||$600 or more||15-Feb||28-Feb (paper filing) 31-Mar (electronic filing)|
|1099-SA||Distributions from an HSA, Archer MSA, or Medicare Advantage MSA||All Amounts||15-Feb||28-Feb (paper filing) 31-Mar (electronic filing)|
|RRB-1099||Railroad retirement benefits||All amounts||31-Jan||Filed by the U.S. Railroad Retirement Board directly with the IRS|
|SSA-1099||Social Security benefits||All amounts||31-Jan||Filed by the Social Security Administration directly with the IRS|
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1099-A: Acquisition or Abandonment of Secured Property
This form is filed by lenders when a debt is fully or partially satisfied because of foreclosure, repossession or abandonment of the property by the debtor. Even if you are not in the business of lending money, this form might need to be filed with the IRS with a copy mailed to the debtor or debtors.
When you are the debtor and receive a 1099-A, you should use the information on the form to determine whether the disposition of the property resulted in a gain or loss to you and report that information on your Form 1040, Schedule D.
Although filed most commonly by stock brokers, both brokers and those engaging in barter exchanges must file this form and provide a copy to the person represented in the transaction.When you receive a 1099-B from your broker, you use the information to determine the gain or loss on your stock transaction and report it on your tax return.
1099-C: Cancellation of Debt
The IRS instruction specifically identifies the entities — including banks, credit unions and credit card companies — that must file a 1099-C when a debt of $600 or more is canceled or forgiven.
When you receive a 1099-C, you use it to determine the amount of the debt that was forgiven and report that information on your tax return. Unfortunately, canceled debt can result in taxable income.
1099-CAP: Changes in Corporate Control and Capital Structure
This form on applies to shareholders of a privately-held corporation that underwent a change in control or significant change in its capital structure.When you are a shareholder of such a corporation and receive cash, stock or other property, the corporation should file a 1099-C with the IRS and provide you with a copy.
1099-DIV: Dividends and Distributions
This form must be filed by banks and financial institutions when they pay dividends or other distributions on a stock that is $10 or more. You can expect to receive a copy of the form for these types of distributions. The IRS provides detailed instructions on how to report this information on Schedule D of your 1040 tax return.
1099-G: Certain Government Payments
All government agencies — federal, state and local — file a 1099 form if they received payments on a Commodity Credit Corporation loans. Additionally, the agencies must file when payments are made for:
- Unemployment compensation
- State or local income tax refunds, credits or offsets
- Reemployment trade adjustment assistance — aka RTAA — payments
- Taxable grants
- Agricultural payments
The taxpayer receiving the payment also receives a copy of the form. For questions or disputes about the information on the form, you’ll need to contact the agency that filed the form with the IRS.
1099-H: Health Coverage Tax Credit Advance Payments
This form is filed by providers of qualified health insurance coverage to eligible recipients when the provider receives an advanced payment from the Department of the Treasury under the health coverage tax credit.You’ll receive a copy of the filed 1099-H if you qualified to receive advance payments, paid directly to your provider, to help pay for insurance premiums. The information on 1099-H is used to determine any health coverage tax credit you qualify for when you file your 1040 tax return.
1099-INT: Interest Income
When you earn interest of $10 or more on your checking and savings accounts, your bank will file this form and send a copy to you. The amount of interest stated on the form is reportable on your tax return. Your financial institution is also required to file this form if it withheld or paid any foreign tax on your interest, or withheld federal income tax from your interest under the backup withholding rules.
1099-K: Merchant Card and Third-Party Network Payments
When you use a third-party network transaction as part of your business, such as PayPal, you will receive a copy of a 1099-K when it’s filed by the third-party. A 1099-K must be filed when your transactions exceed $20,000 or 200 in number. The information on the 1099-K is used to complete your tax return schedules for your business, such as gross receipts or sale, and expenses.
1099-LTC: Long-Term Care and Accelerated Death Benefits
Insurance companies, government agencies and viatical settlement provides must file this form whenever benefits are paid under long-term care contracts or death benefits. You will receive a copy of this form for these benefits if you are the insured or the policyholder; however, this does not necessarily mean that the benefits are taxable income: The payment is not taxable to you if you are the insured. For policyholders who receive per diem benefits, certain limitations apply that might result in a portion of the benefits being taxable.
1099-MISC: Miscellaneous Income
When running a business, this is the most common 1099 form you will either receive or file. The IRS requires you to file this form for your business expenses exceeding $600 that you paid to individuals or sole proprietors, partnerships and limited liability companies treated as partnerships. Payments to corporations are excluded, except for healthcare payments and attorney’s fees. Keep in mind this only applies to payments for your business. Paying more than $600 to your attorney for a personal matter, such as a divorce, does not require a 1099-MISC.
How to File 1099-MISC
You must use the official printed version provided the IRS, which you can order via the IRS website. Do not use the 1099-MISC that you can download from the IRS website because it is not scannable, and the IRS can impose a penalty for filing forms that cannot be scanned.
Although anyone can file 1099-MISC forms electronically with the IRS e-filing, all businesses that file 250 or more 1099-MISC forms in one year must use the IRS e-filing system.
When you receive a 1099-MISC for services rendered or materials provided to a customer, you must report this income on your tax return. Typically, you will use Schedule C and attach it to your Form 1040, but do not file the copy of the 1099-MISC that you received.
Don’t wait to make your quarterly estimated tax payment until you receive your 1099-MISC. You must pay quarterly estimated taxes when the income you receive exceeds $1,000, and the deadlines for estimated tax payments are dependent on when you receive a 1099-MISC.
1099-OID: Original Issue Discount
An original issue discount applies to bonds or notes that are issued at less than face value, and the discounted amount is considered interest income. Form 1099-OID is used by stock brokers to report this interest. When you receive this 1099 from your broker, you should use the information to calculate the taxable OID for your tax return.
1099-PATR: Taxable Distributions Received from Cooperatives
You might receive this form when you receive dividends from a cooperative. A 1099-PATR must be filed by cooperatives who paid its members more than a $10 dividend or withheld any federal withholding tax.For-profit cooperative corporations receive special tax treatment by the IRS and a patronage dividend can be used to reduce taxes.
1099-Q: Payments from Qualified Education Programs — under Sections 529 and 530
You will receive a 1099-Q if someone contributed money to a qualified education program and named you as beneficiary. The person or organization who manages the program files the 1099-Q and provides a copy to you. No tax is due on the distributions if you are in school and use the program money solely for school expenses.
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1099-R: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
When you take a distribution from your retirement plan, the custodian of the plan must file a 1099-R and provide you with a copy. When you take distributions from more than one plan, you will receive a separate 1099-R for each plan. The information on the form is used to calculate the taxable amount for your tax return.
1099-S: Proceeds from Real Estate Transactions
1099-S is used to report the sale or exchange of real estate, such your home, rental property, co-op or any other real estate. In situations where your sale is handled by a title company or attorney, the company or attorney will usually collect the required information and report it.
In certain situations, however, the form does not have to be filed. For example, if the sale price of real estate is less than $250,000 and the property was the seller’s personal residence, the transaction does not have to be reported.
1099-SA: Distributions From an HSA, Archer MSA or Medicare Advantage MSA
When distributions are made from a health savings account directly to you or your medical provider, you will receive a 1099-SA from your plan’s manager. When you use the distributions from the plan for medical purposes, however, you report the distribution yourself by filing Form 8889. The distribution is considered taxable income and is reported on your tax return if the 1099-SA indicates that you did not use the distribution for medical purposes.
RRB-1099: Railroad Retirement Benefits
When you are a beneficiary of railroad retirement benefits, each January you’ll receive an RRB-1099 from the U.S. Railroad Retirement Board. This form is filed by the RRB directly with the IRS and is used to calculate the taxable amount of the benefits received.
SSA-1099: Social Security Benefits
This form is issued directly by the Social Security Administration whenever you receive any Social Security benefits. When you are required to pay income tax on any of the benefits you received, this form provides the information needed to determine the taxable amount.