What is a 1099 Form?

The plain-English answer

A 1099 is an IRS information return — a form that tells the IRS (and you) that someone paid you money during the year. Unlike a W-2, which reports wages from an employer with taxes already withheld, a 1099 reports income where no taxes were withheld at all.

Receiving a 1099 means you're responsible for calculating and paying your own taxes on that income — including both income tax and, for self-employment income, the self-employment tax (15.3%).

Who receives a 1099?

• Freelancers and independent contractors — anyone paid $600 or more for services
• Gig economy workers — Uber, Lyft, DoorDash, Upwork, Fiverr, etc.
• Landlords — rental income in certain circumstances
• Investors — interest, dividends, and capital gains distributions
• Anyone who won a prize or award over $600
• Retirees — Social Security, pension, and retirement account distributions

What the 1099 means for your taxes

When you receive a 1099, the payer has also sent a copy to the IRS. The IRS will match it against your tax return — so the income must be reported, even if you don't receive a 1099 for it (under $600, for example).

For freelance and contractor income (reported on a 1099-NEC), you'll owe:

• Federal income tax — at your marginal bracket rate, on net profit (after deductions)
• Self-employment tax — 15.3% on 92.35% of net self-employment income
• State income tax — varies by state

What to do when you receive a 1099

1. Verify the amount is correct. Compare it to your own records. Contact the payer immediately if there's a discrepancy — corrections must be made before you file.
2. Calculate what you owe. Use our 1099 tax estimator to get your income tax and SE tax estimate.
3. Check if you owe quarterly payments. If you expect to owe $1,000+ in taxes, you should be making quarterly estimated payments. See our quarterly taxes guide.
4. Identify your deductions. Business expenses reduce your taxable income. Use our deductions checklist to make sure you're not leaving money on the table.
5. Report it on your tax return. 1099-NEC income goes on Schedule C. Most other 1099 income has its own schedule or line on Form 1040.

What if you didn't receive a 1099?

You're still required to report the income. The $600 threshold applies to payers — they only need to send a 1099 if they paid you $600 or more. But you must report all income regardless of amount, even if no 1099 was issued.