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Who Must File a 1099?

Find out who has to file a 1099 before you get lost in a sea of papers

Payers must file 1099s with the IRS and their payees must report this information on their tax returns

There are lots of different types of 1099s for different kinds of payments, but the most common is a 1099-MISC used to report miscellaneous income. 1099-MISCs are only used to report payments made in the course of trade or business, not personal payments.

Payers must file 1099s with the IRS to make sure people are accurately reporting their income. Payees will then receive a copy of the 1099 in the mail. They must then use this information to help complete their tax return. If you are a recipient, you don’t have to file a 1099, you just have to report this information on your return.

You must file a 1099-MISC if you

  • paid someone $10 or more in royalties or broker payments in lieu of dividends or tax-exempt interest.
  • paid someone $600 or more in rents, services, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish, etc.
  • made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
  • withheld any federal income tax under the backup withholding rules.

Most commonly an individual or a business will end up filing a 1099-MISC for a freelancer or independent contractor (in other words, someone who isn’t an official employee) for work they did. Likewise if you’re on the opposite end of that transaction, if you are the freelancer or independent contractor, you will receive a 1099-MISC in the mail from that payer detailing the income you received from them.

There are certain payments that do not need to be reported on a 1099-MISC, though the person who receives them may have to report them as taxable income. These include

  • payments to corporations (though there are exceptions to this exception)
  • payments for merchandise, telegrams, telephone freight, etc.
  • payments of rent to real estate agents
  • wages paid to employees (which are reported on a W-2)
  • military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services (also reported on a W-2)

Note that if you are an official employee of your company, your pay will not be reported on a 1099. Instead, you should you will receive a Form W-2 [Wage and Tax Statement] in the mail.

Though 1099-MISC is the most common, there are many other types of 1099 forms that perform the same essential function but each report a different type of income.

If you’ve lost a 1099 from a previous year, you can retrieve a copy of the form from the IRS. Then you will have all of the information you need to file your 2011 tax returns or tax returns from an even earlier year.

Photo via David Reber’s Hammer Photography on Flickr. 

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One Response to “Who Must File a 1099?”

  1. Ruben Vazquez says:

    I started working for a trucking company out of Clearwater Fl.08-2009 until 12-2012 I did sign paper work stating I was a independent truck driver per employment paperwork,Needed this job have a child.After 3 months i knew theirs no independent working for this man.still need job.In 07-2011 reassure by owner that things would get better once he lease on with this bigger company,so i waited as a driver,Still did not file taxes until thing got out of control and i went without pay.file for unemployment they said there no money.Went to IRS and found out last time this company did any paper work for me was 2009 and it was only $2,000,Letting CPA do taxes for me 03/05/2013 and back taxes last 3 yrs. Also found out about a SS-8 form that I should do. Don’t need problems with IRS,first job i had that taxes were not taking out anything more i should know?

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