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What Is a 1099 Form?

Last Updated:
December 28, 2016

If you’ve done any work as a freelancer or independent contractor, then you could receive a 1099 form from companies you’ve worked with (most likely a 1099-MISC). These forms report to the IRS exactly how much a company has paid you in the last tax year as a non-employee — they are the alternative to W-2 forms which companies and organizations use to declare income for employees.

What Defines an Independent Contractor?

According to the IRS or Internal Revenue Service, you are eligible for a 1099 when you work as an independent contractor rather than a direct employee. As an independent contractor, you have the right to control what you work on and how it will be done. Your client can only “control or direct only the result of the work.”

Here are some examples of independent contractors:

  • ‍Driver for Uber or Lyft
  • ‍Freelance graphic designer
  • ‍Airbnb host
  • Self-employed landscaper
  • ‍Social media consultant
  • General contractor

1099 Forms and Taxes

Anyone on the above list may receive at least one 1099 form every year. Here’s why: the government requires that organizations send their independent contractors 1099-MISC forms by January 31st, indicating the income paid to each contractor over the prior year. If a company has paid you less than $600 over the course of the year, they do not need to send you a 1099, but you still have to account for the income.

Because you are not an employee, the organization does not pay a percentage of your taxes or have it withheld from your payments — you need to pay it full. If you will owe over $1,000 to the IRS for the current tax year, you also need to submit quarterly tax payments. In that case, you'll need to estimate your tax liability based on the most recent quarter and use a 1040-ES form to make payments.

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