What Is a 1099 Form?

Introduction

If you earn money from freelance work, a side hustle, or even interest on a savings account, you might receive a 1099 form. It is an important tax document that reports income other than a regular paycheck.

What Is a 1099?

A 1099 form reports income you received that was not from a traditional employer. Unlike a W-2, which shows wages and taxes withheld, most 1099 forms show income where no taxes were taken out. Businesses and banks send copies to both you and the IRS.

Common Types

The 1099-NEC reports payments to independent contractors and freelancers. The 1099-K may report payments received through apps and online marketplaces. The 1099-INT reports interest earned from bank accounts, and the 1099-DIV reports dividends from investments.

What to Do With It

Keep your 1099 forms with your tax documents and report the income when you file your tax return. If you are self-employed, you may owe self-employment tax in addition to income tax. Setting aside part of your side hustle income for taxes helps you avoid a surprise bill.

Conclusion

A 1099 form is simply a record of income you earned. Understanding it helps you stay on top of your taxes as your earning opportunities grow!