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What Is the IRS 1099-MISC? How It Works and What to Do

If you received certain types of income, you'll probably get one of these in the mail. Here's what the 1099-MISC means and what to do with it.
Sept. 5, 2019
Income Taxes, Personal Taxes, Taxes
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A 1099-MISC tax form is a record that someone gave or paid you certain kinds of unusual income. Here’s how the 1099-MISC works.

Sometime in February, you might receive a 1099-MISC tax form (or more than one) in the mail. You need to hang on to it because it can have a big impact on your tax life.

What is an IRS 1099-MISC tax form?

  • A 1099-MISC tax form is a record that someone — a bank or other entity — paid you one of these forms of income:
At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
At least $5,000 for consumer products you sold anywhere other than a permanent retail establishment.
At least $600 for:

  • Rent.
  • Services you performed for an entity that is not your employer.
  • Prizes and awards, including what you win on game shows.
  • Other income payments.
  • Medical and health care payments.
  • Crop insurance proceeds.
  • Fish (or other aquatic life) you sold for resale.
  • Cash from a notional principal contract to an individual, partnership or estate.
  • Payments from clients if you are an attorney.
  • Proceeds from a fishing boat.
  • The 1099-MISC is a common type of IRS Form 1099, which is a record that an entity or person — not your employer — gave or paid you money.
  • You might receive a 1099-MISC tax form from a client if you are a freelancer, independent contractor or self-employed.
  • A Form 1099-MISC will have your Social Security number or taxpayer identification number on it, which means the IRS will know you’ve received interest — and it will know if you don’t report that income on your tax return.
  • Simply receiving a 1099-MISC tax form doesn’t necessarily mean you owe taxes on that money. You might have deductions that offset the income, for example, or some or all of it might be sheltered based on characteristics of the asset that generated it. In any case, remember: The IRS knows about it.

What do I do with a 1099-MISC tax form?

You use your IRS Form 1099-MISC to help figure out how much income you received during the year and what kind of income it was. You’ll report that income in different places on your tax return, depending on the type of income.

If you need help estimating how interest income on a Form 1099-MISC could affect your tax bill, check out our free tax calculator.

>>MORE: See if you can take the Qualified Business Income deduction this year

What does my 1099-MISC tax form mean?

If you received a Form 1099-MISC because you had a relatively unusual form of income, you might also get a few other tax forms in the mail.

1099-B

Form 1099-B covers income from the sale of several types of securities, as well as some types of bartering that take place via bartering exchanges, typically websites. In that case, the exchange might “1099 you” for the income you received. A 1099 isn’t usually required if you barter with someone directly, though you may have to report the income.

1099-G

If you received money from a state, local or federal government — including a tax refund, credit or offset — you might get one of these. If you were on unemployment during the year, you might also have a 1099-G headed your way.

Really get to know your money

Get a complete view of your income, bills and transactions in one simple place. We help you know how much you have and how you’re spending it.

1099-LTC

If your long-term care insurance paid out benefits during the year, the insurer will likely file a Form 1099-LTC. If you received payments from the accelerated death benefits of a life insurance policy, those are reported on this form, too.

1099-R

If you got distributions from a pension, retirement plan, profit-sharing program, IRA or annuity, you might receive a 1099-R. (Remember, many retirement plans are tax-advantaged, so this form might be simple record-keeping on behalf of the IRS.) If you took a loan from your retirement plan, you might have to treat it as a distribution, which means it might be on this form, too, as well as permanent and total disability payments under life insurance contracts.

1099-S

Anybody responsible for closing a sale or exchange of real estate furnishes this statement to you, reporting the proceeds. The proceeds from the sale of your house or other real estate aren’t necessarily taxable (here’s more about how that works).

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