Definition
A 1099 is a family of forms reporting income other than wages, such as contractor pay, interest, dividends, or distributions.
How It Works
Payers issue the relevant 1099 to the recipient and the IRS. Common versions include the 1099-NEC for contractor income, 1099-INT for interest, 1099-DIV for dividends, and 1099-B for brokerage sales.
Example
A consultant paid $80,000 as an independent contractor receives a 1099-NEC and reports that income on Schedule C.
Who It Applies To
Independent contractors, investors, and others receiving non-wage income.
Watch-Outs
1099 income generally carries no withholding, so recipients must plan for estimated taxes and self-employment tax.
