What is a 1099 form? If you’re struggling to decipher all those tiny numbers, you might find yourself panicking come tax time.
Take a deep breath.
Your 1099 is nothing to be afraid of. We’ve put together this guide to help you learn what one of these forms means, who gets one, and how to read it.
So let’s get started!
Table of Contents
What Is a 1099 Form?
A 1099 form is a tax document that reports payment given to you by someone other than your employer. This person will fill out the form and give one copy to you and another to the IRS at the beginning of the year. You can then use this form to file your taxes before the 1099 deadline.
Keep in mind, the number you see on the document is the total amount of money you earned without any tax deducted from it. If you receive one of these forms, you are responsible for taking out the right amount of tax yourself.
There are many different types of 1099 forms that you can get in different circumstances, including:
- 1099-A
- 1099-B
- 1099-DIV
- 1099-MISC
- 1099-Q
- Etc.
And these are just a few. Here’s a more detailed list of all the different 1099 forms and what they’re used for.
Who Gets One?
You’ll only get a 1099 form if you’re an independent contractor, self-employed, or a freelance worker. If you’re a full employee of the company you work for, you’ll get a W-2 when tax time rolls around.
Did you work for more than one client during the year? You’ll get a 1099 from each one.
How to Read a 1099 Form
A 1099 showed up in your mailbox. Now what?
If you aren’t sure what all those numbers in all those boxes mean, here’s a quick lesson in how to read (and understand!) your form.
Figure out Which Type of 1099 You Have
The first thing you need to do is figure out what type of 1099 form you have. If you’re an independent contractor or a freelancer, you’ll likely have a 1099-MISC on your hands. The title of the form should be written near the top in large letters, and it will tell you the name of your form.
However, since 1099-MISC is the most common type of this tax document, we’re going to show you how to read this one below.
Box 1
This box will only be full if you collect rent from someone, such as for an office space or equipment. On top of that, you won’t see a number in this space unless the amount of rent you collected from these things is higher than $600. You don’t have to report anything lower than this.
Box 2
Did you receive royalties for anything? If you answer yes to this question and the amount you earned is more than $10, that number will go in Box 2.
Box 3
For many people, this box will be blank. However, if you won any money from an award (or something similar), that will be reported in this box. If you received more money that isn’t part of your wages, you will also see it here.
Box 4
In some cases, your client might deduct federal income tax from the money you’ve earned. Most of the time, this won’t happen, and the box will stay blank. However, if they do, the amount of withheld money will be listed in Box 4.
Box 5
Did you make any money from fishing boat proceeds? If so, this box will show that number. Otherwise, it will be empty.
Box 6
If you made any health care payments, this box will show them. But don’t be alarmed if this box is also empty. Depending on the type of money you made and from where, many of the boxes on this form will be blank.
Box 7
If you’re an independent contractor, self-employed, or a freelancer, this is one of the most important boxes for you. The number in this box is the total amount of money you’ve made from a client.
Box 8
Did you make substitute payments in place of tax-exempt interest or dividends? If so, that number will be shown here.
Box 9
You only have to worry about this box if you’re a farmer. This box will record any money you received from an insurance company—at least, if that amount is higher than $600. If you didn’t get any crop insurance proceeds, then this box will be blank.
Box 10
If you’re an attorney, this box will show any proceeds you made during the year. But again, your client only has to report these wages if they paid more than $600.
Box 11
if you paid any foreign tax, this box will record that number. However, for most people, this box will stay empty.
Box 12
Again, Box 12 is also empty for many people. You shouldn’t have to worry about this space.
Box 13
There is a type of payment call an excess golden parachute payment. If you received one of these payments, you will see the amount in this box.
Box 14
If you have any non-qualified deferred compensation from the previous year, you will see it in this box. If you don’t, this box will also be empty.
Box 15
This box will show you any taxes that were withheld from your wages. However, since this is a 1099, Box 15 will often be blank.
Box 16
Box 16 will show the identification number of the state where you earned the income. If you earned wages from multiple different states, this number may be different for each 1099 you get.
Box 17
The last box on your form will show you how much money you earned total in the state. If you only earned money from one method, such as Box 7, this number will be the same.
Understanding Your 1099 and Filing Your Taxes Like a Pro
With the tips on this guide, you won’t have to ask yourself, “What is a 1099 form?”, anymore. Now you can read your 1099 (and understand it!) and file your taxes without a problem.
Want to learn some other helpful tax tips?
We’ve got you covered! Don’t hesitate to take a look at the rest of our blog today!
