What is Income Tax Form 1099?

Income tax form 1099 is a document that reports income given to individuals who receive funds from sources other than an employer and have had no taxes withheld. The form given to employees, the W-2, shows income and tax deductions. 1099 forms only report untaxed income.

When a 1099 must be issued

There are several different versions of the income tax form 1099, and each one reports a different type of compensation. The most commonly used form version of the 1099 is the 1099-MISC, which reports non-employee compensation that details the amount paid to a contractor or freelance worker. Businesses are required to issue this form to the worker if compensation totals more than $600 in the given year. It is then the contractor's or freelancer's responsibility to file the amount as income on their tax return.

Other 1099 forms are given to people who have had a significant debt cancelled, dividends, interest income, retirement distributions (IRS tax form 1009 R), long term care and accelerated death benefits, and real estate proceeds. 

Tax obligations

Anyone who received a 1099 has an obligation to report the income when filing their tax return. The Internal Revenue Service and the state are issued copies of the form when they payer files.