How do I obtain a sales tax exemption certificate?
A 1099 form is a type of information return that businesses, organizations, and certain individuals must file with the IRS to report various types of payments made in the course of a trade or business. The 1099 tax form is not a single document, but rather a family of forms, each designed to report a specific category of income or payment. The purpose of these forms is to ensure that recipients of income that is not subject to traditional wage withholding (as on a W-2) are properly reporting that income on their tax returns.
Below is a comprehensive overview of the types of payments that are typically reported on a 1099 form, with references to the most common types of 1099 forms and the circumstances under which each is used.
Form 1099-NEC is used to report payments of $600 or more to individuals or unincorporated businesses for services performed as independent contractors, freelancers, consultants, or other nonemployees. This includes fees, commissions, prizes, awards for services, and other forms of compensation for work performed by someone who is not your employee. It also covers payments to attorneys for services, and cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish. If you withheld any federal income tax under backup withholding rules, you must file a 1099-NEC regardless of the payment amount.
Form 1099-MISC is used to report a variety of other payments, including:
Anyone to whom you paid at least $10 in amounts reportable in boxes 1, 3, or 8, from whom you withheld foreign tax on interest, or from whom you withheld (and did not refund) any federal income tax under backup withholding rules, regardless of the payment amount.
Form 1099-DIV is used by banks and other financial institutions to report dividends and other distributions to taxpayers and to the IRS.
Form 1099-B is used by brokers to report proceeds from the sale of stocks, bonds, commodities, regulated futures contracts, and certain barter exchange transactions.
Form 1099-R is used to report distributions of $10 or more from retirement plans, IRAs, pensions, annuities, and insurance contracts.
Form 1099-K is used to report payments made to merchants or other entities in settlement of reportable payment transactions, such as those made by credit card, debit card, or third-party payment networks (e.g., PayPal). For 2025, the reporting threshold was more than $2,500 in total payments, and it would have dropped to $600 in 2026 and beyond. UPDATE: The “One Big Beautiful Bill Act” (OBBBA), changed this. The reporting threshold for Form 1099-K has been reverted to the pre-2024 level of $20,000 and 200 transactions. This change is effective retroactively to 2022.
Copy A of the tax paper 1099 must be filed with the IRS, while Copy B is provided to the recipient, generally by January 31. Most tax paper 1099 forms are due to the IRS by January 31 (for 1099-NEC). Some forms have later due dates. It is crucial to check the specific form’s instructions for the most accurate and up-to-date deadlines. The electronic filing requirement threshold is 10 or more returns. However, this is an aggregate number for all information returns, not per form type. This means that if you file a combination of 10 or more Forms 1099-NEC, 1099-MISC, 1099-INT, etc., you are required to file them electronically.
In summary: The 1099 form family is used to report a wide range of non-wage payments, including independent contractor compensation, rents, royalties, interest, dividends, legal settlements, and more. The specific type of 1099 form and the reporting threshold depend on the nature of the payment. Businesses should carefully review the IRS requirements each year to ensure compliance with all 1099 tax paper reporting obligations. Learn more by contacting a professional at BT.
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