Couple at a table analyzing a 1099 form

How to Complete a 1099 Form

There are several types of 1099 forms. The IRS classifies these forms as information returns, and they're used to report atypical sources of income. You may need to submit many of these forms or none at all. Here's a rundown of the different types of IRS 1099 forms. If you find yourself answering “yes” to any of the following questions, you need to fill out a 1099 form.

Are you self-employed?

In a traditional job, you would be given a completed W-2 form by your employer. Those of you who are self-employed, however, have to fill out a 1099-MISC form to report your wages. This applies to anyone who does freelance work to supplement their primary job as well.

If you have earned over $400 in a year from working as a freelancer or independent contractor, then you have to report your earnings. Clients that have paid you over $600 during the year will have to fill out your 1099-MISC form. Your clients, unlike a regular employer, won’t withhold tax from your wages. It’s your responsibility to calculate the Social Security and Medicare taxes, which you can find on Schedule SE. You’ll use Form 1040-ES to determine how much income tax you’re required to pay; you can pay the IRS over the course of the year, and depending on your income, you may owe up to four.

Did you receive money from your retirement account?

There’s a 1099 for that. The 1099-R form is used when you’ve received more than $10 in distributions from a tax-deferred retirement plan, such as a pension. If you withdraw money before you’re 59 ½ years old, you’re subject to an additional 10% federal penalty tax.

Did you earn interest income or dividends from investments?

There are specific 1099s for each. The 1099-INT is used to report interest income you gained from savings accounts or investments. As long as you received at least $10 of interest, you have to complete one of these forms by January 31st. If the total of your taxable interest exceeds $1,500, you need to fill out a Schedule B form listing the payers of interest and the amount you received.

You’ll have to get specific with the sources of your interest income, and there are plenty of boxes to indicate where the money came from. Report the sum of your taxable interest in Box 1.  If you were penalized for withdrawing from an account that hadn’t reached maturity yet, report your interest penalties in Box 2. Box 3 is for interest from taxable U.S. savings bonds or Treasury notes. In Box 4, list the amount of federal tax withheld, if any, by the payer of your interest income. Lastly, Box 8 is used to report government interest-bearing investments.

If you own stocks that pay dividends, or received a distribution from a mutual fund, then you have to fill out a 1099-DIV along with your tax return. You’ll have to report your ordinary dividends in Box 1a, qualified dividends in Box 1b, mutual fund distributions in Box 2a, and the amount of state or federal taxes withheld in Box 4.

Did you receive government payments? 

Whether you received unemployment or a grant, you need to report it on a 1099-G. Unemployment compensation from the state is considered taxable, and must be reported in Box 1. Box 2 is for your state tax refund for the tax year listed in Box 3.

There are several other boxes, but most people are concerned with Box 1 and 2. If you had any untaxed government payments, you must report it in Boxes 4, 10a, 10b, and 11. Trade adjustments are reported in Box 5, and taxable grants from government agencies are to be listed in Box 6. Box 7 is for payments from the Department of Agriculture, and on a related note, Box 9 is used for the gain on agricultural loans.

Was one of your debts cancelled?

Sometimes a debt grows to be an impossible burden. If your lender grants you a debt cancellation, you may feel relief—until the IRS requires you to pay taxes on the old loan. In the eyes of the IRS, a cancelled loan is considered taxable income because you were given a payment that you didn’t reimburse.

The 1099-C form will be given to you by your lender. There are a few loopholes that may allow you to avoid taxation: bankruptcy and mortgage forgiveness. If  you were insolvent during the time of cancellation or if your bankruptcy is qualified as a Title 11 proceeding, you’re safe. And as long as you were married and filing taxes with your spouse from 2007 to 2014, you can have up to $2 million excluded ($1 million if you file independently). 

Last Updated: August 12, 2015