When it comes to tax season, understanding Form 1099 can be overwhelming—especially with all the technical terms involved. Whether you’re a freelancer, small business owner, or simply someone who receives non-wage income, knowing the key terms associated with Form 1099 can make the filing process much easier.
To help you navigate the tax jargon, Form1099online.com, your trusted IRS-authorized e-filing service, has compiled this simple glossary of the most common Form 1099 terms.
Table of Contents
1. Form 1099
A series of IRS forms used to report various types of income other than wages, salaries, and tips. Examples include freelance payments, interest income, retirement distributions, and more. There are several types, including 1099-NEC, 1099-MISC, 1099-INT, and 1099-DIV.
2. 1099-NEC (Non-Employee Compensation)
Used to report payments of $600 or more to independent contractors, freelancers, or anyone not classified as an employee. This form is especially relevant for gig workers and small businesses.
3. 1099-MISC (Miscellaneous Income)
Used to report a variety of payments such as rent, legal settlements, awards, and other miscellaneous income. It was once used for contractor payments, but that duty shifted to Form 1099-NEC starting in 2020.
4. 1099-INT
Used to report interest income over $10, typically from banks, credit unions, or other financial institutions. If you earned interest from a savings account, you’ll likely receive this form.
5. 1099-DIV
Reports dividends and distributions of $10 or more from investments in stocks, mutual funds, or ETFs. This form is important for investors and shareholders.
6. 1099-K
Reports income received through third-party payment networks such as PayPal, Venmo, or credit card transactions. New IRS thresholds may apply, so even small business transactions can be included.
7. TIN (Taxpayer Identification Number)
This is usually your Social Security Number (SSN) or Employer Identification Number (EIN). It is required when filing any 1099 form to identify the taxpayer.
8. Payer
The business, company, or individual who makes the payment and is responsible for filing the 1099 form with the IRS.
9. Recipient (Payee)
The individual or business that receives payment and is reported on the 1099 form. The recipient also receives a copy of the form for their own tax filing.
10. E-Filing
The process of electronically submitting your Form 1099 to the IRS. E-filing is faster, more secure, and highly recommended. Form1099online.com makes e-filing simple, affordable, and IRS-compliant.
11. B-Notice
A backup withholding notice issued by the IRS if the TIN provided on the 1099 does not match IRS records. It usually requires the payer to withhold 24% from future payments to the recipient until the issue is resolved.
12. Filing Deadline
Form 1099-NEC must be filed with the IRS and sent to recipients by January 31 of the following year. Other 1099 forms (like 1099-MISC) may have different due dates depending on how they are filed.
13. Backup Withholding
A federal tax withholding of 24% required in certain situations, such as incorrect TINs or B-Notices. This ensures the IRS still receives taxes from reportable income.
14. Corrected Form
If you make a mistake on a 1099 form (wrong TIN, name, or dollar amount), you must file a Corrected 1099. At Form1099online.com, we make corrections easy with a user-friendly interface.
15. NEC vs. MISC
While both report non-salary income, 1099-NEC is used strictly for contractor payments, and 1099-MISC covers other miscellaneous income types like rent and royalties.
16. Transmittal Form (Form 1096)
A summary form used when submitting paper copies of 1099s to the IRS. Not needed for e-filing, another reason to choose Form1099online.com for a hassle-free experience.
17. State Filing
Some states require copies of 1099 forms to be filed at the state level. Form1099online.com supports state filing in applicable states to ensure you’re fully compliant.
18. IRS FIRE System
The IRS’s Filing Information Returns Electronically (FIRE) system is used for submitting 1099s electronically. However, it can be complex—Form1099online.com simplifies the entire process for you.
19. TIN Matching
A system that allows payers to verify that a payee’s TIN matches IRS records before filing. This helps avoid penalties and B-Notices. This service is integrated into Form1099online.com to help you file with confidence.
20. Penalty
If you miss a deadline or file incorrectly, you may face IRS penalties ranging from $50 to over $580 per form, depending on how late or incorrect the filing is. Accurate and timely filing through Form1099online.com can help you avoid these fees.
Conclusion
Tax filing can be complex, but understanding key terms can save you time, money, and stress. Whether you’re issuing or receiving a 1099, knowing this glossary ensures you’re equipped with the knowledge you need.
Ready to e-file your 1099 forms quickly and securely? Visit Form1099online.com — the fast, IRS-authorized platform trusted by thousands of businesses across the U.S.