How Many Types of 1099 Forms Are There?

types of 1099 forms tax form

Have you just started doing work as an independent contractor? Have you just recently started up a business that receives contract-based income from clients?

Whatever your situation may be, you may currently be enjoying the benefits that come with access to payment that isn't taxed directly when it goes into your account. But that isn't the case forever — when tax season rolls around, you're going to have to use one or more of the various 1099 forms out there to pay taxes on your income.

What is a 1099 Form?

A 1099 form is the primary tax form used to report taxation on income from non-traditional sources. So while a W2 is used to report income from a steady job, a 1099 is used by contract-based employees and businesses.

There are a few different types of 1099 forms, and you have to use the right IRS form 1099 in order to ensure a smooth taxation process.

1099-Misc

What is 1099-Misc?

The answer is simple: this is the most common type of 1099 form is the 1099-Misc form. This is the form that is used to report all kinds of miscellaneous income that you may have received over the tax year.

Most freelancers and self-employed individuals who earn money on a contract basis will use this form to report that income. All individuals who earn more than $600 in a calendar year from these sources must use a 1099-Misc form, supplied by the company they contracted with, to report income.

1099-Int

The 1099-Int form reports income earned from interest. The most common example is income that you may earn from a savings account.

Keep in mind that the marginal tax rate on this income will be the same as the marginal tax rate on your salary or other income sources.

1099-Div

The 1099-Div form reports income from dividends. Let's say for instance that you own a 1000 shares of some company that pays stock dividends. These 1000 shares will pay you a certain sum of money over the four quarters of the tax year.

This sum of money is what is reported on the 1099-Div form.

1099-C

The 1099-C form reports on cancelled debt. If you negotiate a lower debt amount with a lender, something important to keep in mind is that the decrease in debt owed is considered income and will be taxed as such via a 1099-C.

1099-R

The 1099-R form is used on contributions to retirement accounts. This could include a 401(k), Roth IRA, a pension, or something similar.

1099-S

The 1099-S form deals with income from sale transactions. The most common use case is the sale of the house. Some of the gains in property value on your home may be taxable through this form.

1099 Forms You Need to Know

There you have it. Now that you know the six types of 1099 forms out there, you should be far better equipped to figure out which of these six is right for your tax situation!

For more financial articles, be sure to take some time to check out the rest of the articles on the website before you go! The more you know your taxes and accounting, the better shape you'll be in with the IRS.