Heads Up: The Fed continues to raise rates — up 3% this year — making credit card debt even costlier.
Pay it off today with a low fixed-rate personal loan. View your rate —>

What Is IRS Form 1099?

December 02, 2021 · 4 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

What Is IRS Form 1099?

IRS Form 1099 is a key part of filing annual income taxes for certain earners—including freelancers, independent contractors, income-earning stock investors, and some retirees. The 1099 covers income earned from a non-employer source. It can be filed by either a company or individual who paid the recipient of the form.

Because IRS Form 1099 documents taxable non-employee income, it’s important to keep up-to-date copies of any 1099 sent to you—double-checking the listed earnings to make sure they’re accurate. There are different subtypes of the 1099, depending on the type of taxable income being documented.

While by no means comprehensive, below is a general overview of IRS 1099 forms—including who might receive one and what sorts of income are documented therein.

Everyone’s financial and tax scenario is unique, so it’s advisable to contact a licensed tax professional or the IRS with income tax questions about your specific earnings or tax liability.

What Do IRS 1099 Forms Document?

IRS Form 1099 reports income earned from self-employment, interest, dividends, and other sources. 1099 recipients can get the IRS form from the company, state, individual, or organization that paid them potentially taxable income.

Since this document can contain information about potentially taxable income (pre-deductions), it’s worth holding on to all 1099s received—whether printed or sent electronically. IRS 1099 forms can be helpful when filing both state and federal income taxes.

Who Receives a 1099?

Should you expect a 1099? Well, it depends. If you do any work as a freelancer or an independent contractor, then it’s likely that you will receive one for pretax, non-employee compensation.

More specifically, the answer is yes if you’ve received at least:

•  $600 in business rental income
•  $600 for services from a person or business that is not your employer
•  $600 in prizes or awards
•  Other non-employee income—including $10 or more in royalty income, $600 of business attorney fees, or $5,000 in direct sales.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!

Why Did I Receive a 1099 for Investments?

Another common reason you may receive an IRS Form 1099 is investment income. If you own bonds, dividend-paying stocks, or mutual funds that produce income, it’s likely that you’ll receive a 1099 that outlines the income for which you’ll be liable. Even if you reinvest those dividends immediately, you’ll have to pay income tax on dividends that have been paid out.

Like an IRS W-2 form, a 1099 reflects your income for a given year. But a W-2 reflects income from wages or a salary, which come to you with the taxes already having been deducted. A 1099 shows raw income that has yet to be taxed. Some (but not all) recipients may qualify for further tax deductions on the income listed on the 1099 form.

Different Types of 1099 Forms

Taxes are complicated, and 1099 forms are no exception. There are several versions of 1099 forms. They include:

•  1099-MISC: Independent contractors and freelancers receive this from those who have paid them at least $600.
•  1099-INT: This reports interest income. It usually comes from a financial institution for interest income from a CD or savings account.
•  1099-A: You’ll receive this form if your mortgage lender canceled some or all of your mortgage, usually because of a foreclosure.
•  1099-B: If you trade or barter securities, or anything, this form is the official record of the income you received on those trades, and it’s usually filed by the exchange where you made the deal.
•  1099-C: Debt forgiveness is considered income, and 1099-C tracks that income.
•  1099-G: If you received unemployment benefits or any other money from a state, local, or federal government, such as a tax refund or credit, you may receive one of these
•  1099-S: Income earned on real estate transactions will be reflected in this form.
•  SSA-1099: This reflects the Social Security payments you’ve received in the past year.
•  1099-K: This report shows total receipts of payments from PayPal, credit cards, and other sources. But to receive the form, you have to receive $20,000 from at least 200 transactions.
•  1099-DIV: Annual dividends and distributions from any type of investment will show up on this form.

Understanding the 1099 for Investors

The 1099-DIV and 1099-INT are perhaps the most pertinent types of 1099s for anyone who invests. It’s important to note that anyone who takes in more than $1,500 in interest or dividends during a given year will also have to file a Schedule B as part of their tax return.

Investment dividends and interest are both considered income and are taxed at your income tax rate. At the same time, capital gains made on short-term investments may also be taxed at your income tax rate.

It’s important to factor in any returns you’ve made on investments held for less than a year when tallying your tax return at the end of the year.

Tabulating Tax Deductions for the Year

While wage and salary income are usually taxed before being disbursed to employees, other types of income usually aren’t. But that fact doesn’t mean 1099 recipients necessarily owe taxes on all of the income listed on the IRS 1099 form.

For instance, freelancers and independent contractors generally can, or must, pay estimated quarterly taxes to avoid a big tax bill each year. In these cases, they may even receive a tax return on their 1099-reported income (assuming overpayment).

At the same time, some 1099 recipients could have deductions that offset the income. Simply put, deductions reduce tax liability by lowering one’s taxable income for a given year. The standard deduction for tax year 2021 for a single person or a married couple filing separately is $12,550, and for a married couple filing jointly, $25,100. But itemized deductions might include:

•  Student loan interest
•  Mortgage interest
•  Qualifying charitable donations
•  Medical expenses (for those who itemize deductions)

If you’re a freelancer or independent contractor, you may be able to deduct a wide range of business-related expenses—including a home office , supplies, travel, and client dinners.

Regardless of which deductions you claim, it’s important to consult with a tax professional to make sure you’re neither overpaying nor underpaying your taxes.

The Takeaway

IRS Form 1099 documents income earned from non-employer sources and can be used when filing and calculating one’s annual tax liability. It’s commonly sent to freelancers, independent contractors, investors, Social Security recipients, and those whose forgiven debts count as taxable income.

For additional specifics on this tax filing season, 1099 recipients may want to check out IRS Filing and Payment Deadlines Questions and Answers page.

In addition to IRS forms, keeping tabs on income and expenses—whether it’s money earned as a freelancer or tax-deductible expenditures—can be a good way to understand one’s tax liability from year to year. With a SoFi Checking and Savings®, users can save, spend, and categorize their earnings.

Keep track of your income and expenditures on the go and open a checking and savings account with SoFi.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet


All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store
SoFi Android App, Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender