Small business owners and self-employed individuals—such as locum tenens, CRNAs, freelancers, gig workers, and independent contractors—are typically familiar with the 1099 form, which they receive each January for services rendered in the previous year. But chances are they will also need to file a 1099 form to the Internal Revenue Service (IRS) if they hired or paid other independent contractors for their trade or business.
What are 1099 Forms?
A 1099 form reports an individual’s non-payroll income for a given tax year. The IRS uses these forms to ensure that all taxable income is accurately reported, as such income is not included on a W-2.
A 1099 form must also be issued to recipients of income outside of traditional employment, which serves as an official record to help them file an accurate return.
1099 Forms Commonly Filed by Self-Employed
Small business owners and self-employed individuals, in the course of their trade or service, are required to file a 1099 form if they’ve made certain types of payments during the year. There are various 1099 forms to report specific kinds of income, but the most commonly filed forms by the self-employed or business owners include:
- 1099-NEC – reports payments of at least $600 to non-employees for their services, including parts and materials. It also covers legal fees paid to attorneys or law firms.
Business owners and self-employed individuals typically receive the 1099-NEC form for their trade and services. But if you hired other independent contractors, freelancers, or gig workers, to support your business, you would also need to file this form after the tax year ends. For example, if you engaged the service of a freelancer to manage your business’ website and social media account and paid her at least $600 in a tax year, you are required to file a 1099-NEC.
The 1099-NEC form must be issued to the income recipient and filed with the IRS by January 31st of each year.
- 1099-MISC – reports various types of income but it is specifically used is you paid at least $10 in royalties or at least $600 for specific expenses, including:
- Rents
- Medical and healthcare services
- Prizes and awards
- Gross proceeds to an attorney such as settlement agreement
- Federal income tax withheld including backup withholding
- Crop insurance proceeds
- Substitute payments in lieu of dividends or interest
- Fish purchased for resale
- Section 409A deferrals
- Excess golden parachute payments
- Nonqualified deferred compensation
The 1099-MISC form must be issued to income recipient not later than January 31 and filed with the IRS by February 28 (paper) and or March 31 (electronic).
Important: If you need to file at least 10 information returns, you are required by the IRS to have them filed electronically.
Who are Exempt to File 1099 forms?
You are not required to file 1099 forms if you are not engaged in a trade or business. The following situations also exempts you from filing a 1099 form even if you are engaged in a trade or business:
- The payment was made to a corporation
- The payment is for personal on non-business purposes
- The amount paid is less than $600 or the required threshold.
Penalties for Late and Inaccurate Filing
Failure to file accurate 1099 forms on time can result in penalties. For the 2025 due dates, the penalty ranges from $60 to $330 for each 1099 form depending on how late the correction or filing was made. However, an intentional disregard of 1099 forms can cost you $660 per form.
Need help with your 1099 filing?
You may want to consult and work with 1099 Accountant – We offer online bookkeeping, online advisory services and online tax and accounting services. We offer reasonable rates. We only work with independent contractors, freelancers, and one-person business. We work with locum tenens from California to New York City and everywhere in between. Yes, even Hawaii!
Contact us toll-free (855)529-1099 or make an appointment for a free consultation. Contact Us