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What Is a 1099?

September 7, 2016
Income Taxes, Personal Taxes, Taxes
What is a 1099, and Understanding All its Varieties
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We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

Sometime in February, you might receive one or more documents in the mail called a 1099. You need to hang on to them, because they can have a big impact on your tax life.

So what’s on a 1099 form?

A 1099 is a record that an entity or person — not your employer — gave or paid you money. The payer usually has to generate the 1099 and send copies to you and the IRS. You might receive a 1099 from your bank, for example, because it paid you interest on your savings. Or you might receive one from the financial institution that holds your IRA, because it wrote you that check from your account. Or maybe one will come from your state, because it sent you a tax refund last year.

Whatever the case, a 1099 will have your Social Security number or taxpayer identification number on it, which means the IRS will know that you’ve received money — and it will know if you don’t report that income on your tax return.

But that raises an important point about 1099s: Just because you get one 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.

Types of 1099 forms

There are a lot. Here’s a basic rundown of the 1099s most likely to cross your path.


You might receive one of these if your mortgage lender canceled some or all of your mortgage, or you were involved in a short sale of your home. Why? Canceled debt is income in the eyes of the IRS — and it’s generally taxable.


These cover 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.


If you persuaded a credit card issuer or other lender to settle your debt for less than you owe, you’re not entirely off the hook. The amount the lender forgives is likely taxable income, and the 1099-C tells all.


You might receive one of these if you hold shares of a corporation that was acquired or underwent a big change in capital structure and you got cash, stock or other property as a result.


One of the most common flavors of this form, the 1099-DIV reports dividends you received. This doesn’t include dividends on your share account at the credit union. The IRS considers those interest, so they appear on another 1099: the 1099-INT.


If you received money from the 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.


If you earned more than $10 in interest from a bank, brokerage or other financial institution, you’ll receive a 1099-INT.


If your long-term care insurance paid out benefits during the year, the insurer will likely file one of these forms. If you received payments from the accelerated death benefits of a life insurance policy, those are reported on this form, too. (Learn more about using life insurance for long-term care here.)


This is a catch-all for income that doesn’t fit into other 1099 categories, though it does have some specific purposes. Income from prizes and awards are examples.


You might receive this if you bought bonds, notes or other financial instruments at a discount to the face value or redemption value at maturity. Typically, the instrument must have a maturity of more than one year.


If you belong to a co-op and received at least $10 in patronage dividends, expect to see this form in your mailbox.


You scrimped and saved to build a decent 529 account for your child’s college tuition … and this shows up. Yes, the 1099-Q reports money that you, Junior or Junior’s school receive from a 529 plan. Keep in mind, however, the earnings in a 529 plan are generally not subject to tax when they’re used for qualified education expenses, so for many people, the 1099-Q is just record-keeping. (Read more about how to optimize your 529 tax strategy.)


If you got distributions from a pension, retirement plan, profit-sharing program, IRA or annuity, you might receive one of these. (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.


Anybody responsible for closing a sale or exchange of real estate furnishes this statement to you, reporting the proceeds. Again, the proceeds from the sale of your house or other real estate aren’t necessarily taxable, so do your homework.


This is the form you’ll receive if you took any distributions from your health savings account, Archer medical savings account or Medicare Advantage. Remember, HSA and Archer distributions generally aren’t taxable if you use them to pay for qualified health expenses. So again, for many people this form is simply proof that the money left the account and went to you.

Tina Orem is a staff writer at NerdWallet, a personal finance website. Email: