How to Fill Out a 1099 Tax Form: Step-by-Step for Freelancers & Businesses

Not to start on a dramatic note, but let’s assume this happened to you.

You’ve just started your business. And it’s been, what, a month? Maybe two.

You don’t have a full-time team yet, so you’ve hired a few freelancers to help. One’s handling your social media, another built your landing page, someone else helped with branding. It’s all moving fast. 

You’re paying invoices, keeping up with deliverables, and then someone asks, “Hey, will you be sending me a 1099?”

You freeze. 1099 form? That sounds official. Complicated. Tax-y. Something you thought you’d deal with way later, not while still figuring out your office stationaries.

But here it is. You can’t dodge! That 1099 tax form is something you’re legally required to deal with.

Don’t worry. Breathe. This is the blog you should open when the term “how to fill out a 1099 tax form” lands as an urgent task. 

Let’s clarify everything you need to know about the 1099 tax form.

What Is a 1099 Tax Form? Who Needs It?

A 1099 is a tax form used in the United States to report income that is not from a regular job or salary.

You’ll receive this form if you earned money as a freelancer, consultant, contractor, or from other sources like interest, dividends, or online sales.

Who Needs a 1099?

You need a 1099 form if:

• You worked independently (freelance, project-based, contract work)

• You were paid $600 or more by a U.S. company or client during the year

• You earned money from banks (interest), investments (dividends), or online platforms (like PayPal, Etsy, Upwork)

• You rented out property as an Airbnb or won prize money

Now, you do not get a 1099 if you are:

• A regular employee with a fixed salary (in that case, you get a W-2, not 1099)

• Earning less than $600 from a client (though you still must report the income)

🔖 Related Read: A Complete Guide to IRS Tax Forms

Types of 1099 Forms: Which One Do You Need?

There are over 20 types of 1099s, but you only need to know a few unless you’re a tax professional.

Here are the most common ones:

1. 1099-NEC — Non-Employee Compensation

This is used when a freelancer, independent contractor, or gig worker is paid $600 or more by a company or client in a calendar year. 

If you are working remotely from India or any country outside the U.S. and a U.S. client pays you for your services, they may issue you a 1099-NEC.

This income must be reported on your Indian tax return, but you can avoid U.S. tax by submitting Form W-8BEN to the client. Learn about Form W-8BEN from our tax pros.

2. 1099-MISC — Miscellaneous Income

This one is used to report other types of payments that are not related to employee salaries. This includes rent, royalties, prizes, and legal settlements.

If someone pays you rent or a royalty, and it totals more than a certain amount during the year, they may issue you a 1099-MISC.

3. 1099-K — Payment Card and Third Party Network Transactions

This form is used when you receive payments through third-party apps like PayPal, Stripe, Venmo (business), or similar platforms.

If your total payments through such platforms exceed a threshold (currently $20,000 with 200 transactions, but this is changing), you may receive a 1099-K.

Even if you are not based in the U.S., platforms sometimes issue this form for reporting purposes.

4. 1099-INT — Interest Income

1099-INT is for interest income. If a U.S. bank or financial institution paid you interest (usually $10 or more), you will receive a 1099-INT.

This applies to savings accounts, bonds, or fixed deposits held in U.S. financial institutions.

5. 1099-DIV — Dividends and Distributions

This form is sent when you receive dividend income or capital gains distributions from U.S. stocks or mutual funds.

If you invest in U.S. markets and receive earnings from your holdings, this form helps you report that income to the IRS.

6. 1099-R — Retirement Distributions

1099-R is used when you withdraw money from a retirement plan such as a 401(k) or IRA. Any withdrawals, including early ones, must be reported and are considered income.

7. 1099-G — Government Payments

This form is issued when you receive payments from the U.S. government, such as unemployment benefits or state tax refunds.

If you’re a U.S. taxpayer receiving government support, this form shows how much was given to you.

8. 1099-C — Cancellation of Debt

This form gets issued when debt is canceled or forgiven. If you settle a loan for less than the full amount owed, the forgiven portion is treated as taxable income in many cases, and this form is used to report it.

🔖 Related Read: W-9 vs 1099: Contractor Tax Forms Demystified

When Are You Required to Issue a 1099?

If you are a business owner, client, or company based in the United States and you have paid an individual or another business for services, you may be required to issue a 1099 form. 

This includes sole proprietors, partnerships, limited liability companies (LLCs), and corporations (in some cases). The most common scenario is when a business pays a non-employee like a freelancer, consultant, or independent contractor.

If you paid that person or business $600 or more during the tax year for services, and they are not on your payroll (meaning they are not an employee), you are expected to issue them a Form 1099-NEC (Nonemployee Compensation).

You must also send a copy to the IRS. 

Plus, if you rent office space or equipment and pay the landlord $600 or more, you are required to issue Form 1099-MISC (Miscellaneous Income).

Other examples that require 1099-MISC include payments for prizes, awards, royalties over $10, and legal settlements.

This applies to payments made in cash, check, direct deposit, or online transfers. It still applies even if you paid in multiple smaller amounts that together total $600 or more over the entire year.

When You Are Not Required to Issue a 1099?

There are several key exemptions to the 1099 filing requirement.

First, you do not need to issue a 1099 for payments made to corporations, including S corporations and C corporations.

This is a major exception, unless the payment was for medical or legal services. In those two cases, you still must issue a 1099, even if the service provider is a corporation.

Second, you are not required to issue a 1099 for payments made via credit cards or third-party platforms like PayPal, Stripe, or Venmo (business).

In these cases, the platform issues a 1099-K to the service provider, and you don’t have to do anything extra.

Third, you do not need to issue a 1099 for purchases of physical goods or tangible items, like office supplies, equipment, or software licenses. The 1099 requirement applies only to services, not goods.

Fourth, you are not required to issue a 1099 to employees. Employees receive a W-2, which reports their salary, tax withholdings, and other benefits.

If someone is on your payroll and receives a regular paycheck with deductions, they are not a 1099 recipient.

Fifth, you do not issue 1099s for foreign contractors or freelancers who work from outside the U.S., provided they don’t have U.S. tax obligations.

However, you should collect a Form W-8BEN from them to prove they are foreign and not subject to U.S. tax reporting.

When You Must File the 1099

You must send the 1099-NEC to the contractor and the IRS by January 31 of the following year. 

For example, if you paid someone in 2024, you must send the 1099 form by January 31, 2025. If you are also filing with the state (some states require this), you may need to submit it to the state tax agency as well.

If you file electronically, you can use services like doola to help you meet this deadline. 

Do not miss: If you are filing by paper, you must use special red-ink forms for IRS copies, not regular printed PDFs.

What Information Do You Need to Fill Out a 1099 Form?

If you need to fill out a 1099 form, especially the common 1099-NEC, there is a specific set of information you need to collect and enter accurately.

This applies whether you’re filling it manually, using software, or through an online filing platform.

Here’s exactly what you need to complete a 1099 form:

Your Details as the Payer

You must enter your business or personal name, depending on how you operate. You’ll also need your address, phone number, and most importantly, your Taxpayer Identification Number (TIN).

If you’re a sole proprietor or freelancer, this could be your Social Security Number (SSN). If you have a business, it’s likely your Employer Identification Number (EIN).

This information appears in the section labeled “Payer’s Name” and “Payer’s TIN.”

Recipient’s Information

You need the full legal name of the person or business you paid. You’ll also need their address and Taxpayer Identification Number (usually an SSN for individuals or an EIN for businesses).

To get this, you should ask them to fill out Form W-9. That form provides everything you need: name, TIN, and business type (individual, LLC, corporation, etc.

The W-9 is not filed with the IRS, but you keep it for your records in case the IRS ever asks for proof of why you sent a 1099. 

Payment Amount

You need to total all the payments you made to the recipient during the year for services. This includes fees for work done, project-based payments, or recurring contract payments, as long as they total $600 or more for the calendar year.

Enter this total in Box 1 of the 1099-NEC form. If you made payments using a platform like PayPal or a credit card, do not include those amounts here, those are reported separately on a 1099-K by the payment processor.

Federal and State Tax Withholding (if any)

In most freelance or contractor situations, you do not withhold taxes.

However, if you did withhold federal income tax, perhaps due to backup withholding or other requirements, you must report the withheld amount in Box 4.

Some states also require reporting state income tax withholding, which you’d enter in Boxes 5 through 7. If your state doesn’t have income tax or doesn’t require this, you can leave those boxes blank.

Account Number (optional)

If you are filing more than one 1099 for the same contractor for different accounts, you can enter an internal account number in the “Account Number” box to help you track the payments separately.

If this doesn’t apply, you can leave it empty.

Filing Information

You also need to know where to send the 1099. You send Copy A to the IRS, Copy B to the contractor, and keep Copy C for your records.

Depending on the state, you might also need to send Copy 1 to the state and Copy 2 to the contractor for state tax filing.

Filing Deadline

Make sure you have all this information ready by January 31, which is the deadline to send the 1099 form to both the contractor and the IRS.

You can take doola’s help to complete and submit everything accurately.

Step-by-Step: How to Fill Out Form 1099-NEC

Like we mentioned earlier, Form 1099-NEC is used to report nonemployee compensation.

This includes money you paid to freelancers, contractors, or independent professionals (not employees) during the year, if the total payment was $600 or more.

Take this pdf as a reference point.

Now, what version of this form do you need?

You can’t just print this form from the IRS website and mail it. The IRS requires Copy A to be filed with special red-ink scannable forms if you’re mailing it. 

But if you’re e-filing (which most people do now), you can fill out everything digitally using software like doola.

SECTION 1: Payer Information (That’s You)

In the top-left section of the form, enter your own details:

• Payer’s Name: Your business name or your full name (if you’re an individual or sole proprietor)

• Payer’s Street Address, City, State, ZIP Code: Your mailing address

• Payer’s Telephone Number: Your contact number (optional but recommended)

• Payer’s TIN (Taxpayer Identification Number): This is your EIN (Employer Identification Number) if you’re a business or your SSN (Social Security Number) if you’re filing personally.

SECTION 2: Recipient Information (The Contractor You Paid)

On the right side, enter the details of the person or business you paid:

• Recipient’s TIN: Their Social Security Number (SSN) or Employer Identification Number (EIN). You get this from the W-9 form they gave you.

• Recipient’s Name: Their full legal name as shown on the W-9

• Recipient’s Street Address, City, State, ZIP Code: The address listed on their W-9

If the contractor provided incorrect information or didn’t give a W-9, you may have to withhold backup tax (24%). In that case, Box 4 must be filled. Otherwise, you can leave it blank.

SECTION 3: Payment Details (The Money You Paid)

This is the heart of the form, where you enter what you paid.

• Box 1 – Non-employee Compensation: Enter the total amount you paid the contractor during the calendar year (e.g., all of 2024 if you’re filing in 2025). Only amounts paid via cash, check, or bank transfer. Not payments made through PayPal, Venmo (business), or credit card. Those are reported on Form 1099-K.

For example: If you paid a designer about $900, then enter 900.00 here.

• Box 2 – Reserved: This box is no longer used. Leave it blank.

• Box 3 – Reserved: Also not used. Leave it blank.

• Box 4 – Federal Income Tax Withheld: If you withheld backup withholding tax from this contractor, enter the total withheld here. Otherwise, leave it blank.

SECTION 4: State Information (Optional)

This section appears on the bottom left:

• Box 5 – State Tax Withheld: If your state requires you to withhold state income tax, enter the total here. Many states don’t require this. Leave it blank unless it applies.

• Box 6 – State/Payer’s State Number: This is a state-specific ID number you may be given when you file state taxes. Leave blank unless your state told you to fill this in.

• Box 7 – State Income: Enter the amount of non-employee compensation that is subject to state tax. Often matches Box 1 if filled.

If you live in a state with no income tax (like Texas, Florida, Washington), you can leave Boxes 5–7 blank.

SECTION 5: Account Number (Optional)

Below Box 7, there’s a section to add an Account Number.

Use this only if:

• You’re issuing multiple 1099s to the same contractor under different accounts

• You need to track these internally for your business records

Otherwise, you can skip it.

What to Double-Check Before Submitting

• The recipient’s TIN is accurate and matches the name on their W-9

• You correctly calculated and entered the payment total in Box 1

• You didn’t include payments made through PayPal, Venmo, or credit cards

• You sent the correct copies to the IRS, the contractor, and (if needed) the stat

Should you find the various 1099 forms, their associated regulations, and the numerous intricate fields challenging, with the potential for errors to arise from incorrect details, rest assured.

Assistance is available from doola’s tax experts. We will complete the forms on your behalf, meticulously verify all information, and ensure timely submission.

This allows you to relax, free from stress, while we manage the necessary documentation. Sign up (for free!) now.

Where and How to File the 1099: IRS vs. Recipient

This section offers a clear and simple explanation of where and how to file the 1099 form, broken into the two required steps: one for the IRS and one for the recipient of the payment.

Step 1: Filing with the IRS

You must file Copy A of Form 1099-NEC with the Internal Revenue Service (IRS).

There are two ways to do this:

✔️ If you are e-filing, you can use IRS-authorized platforms like Tax1099.com, QuickBooks, Gusto, doola, or eFile4Biz. These services will let you upload your 1099 info, fill it out, and submit it directly to the IRS.

✔️ If you are filing by mail, you must use the official red-ink paper version of Copy A. The IRS does not accept printed PDFs for Copy A. You also need to include Form 1096, which is a summary sheet that lists how many 1099s you’re sending.

The deadline to file with the IRS is January 31 every year.

Step 2: Sending to the Recipient (the Contractor or Freelancer)

You must also send Copy B of the 1099 form to the person you paid. This shows how much you paid them during the year, and they’ll use it to report their income when they file taxes.

You can mail Copy B to them, or send it electronically if they agree to receive it that way. Make sure their name, address, and taxpayer ID are accurate, based on the W-9 they gave you.

This copy must also be sent by January 31.

Common Mistakes to Avoid When Filing 1099s

Here are a few common mistakes people make when filing 1099s:

❌ Missing the filing deadline

The IRS doesn’t offer much grace when it comes to deadlines. You must send Copy A to the IRS and Copy B to the recipient by January 31.

Filing late can result in penalties starting at $60 per form and increasing depending on how late you are.

If you’re mailing, delays at the post office don’t count. It has to be postmarked or e-filed on time.

❌ Using the wrong form

This happens more than you’d think. For example, people often confuse Form 1099-NEC with 1099-MISC. If you’re paying for freelance or contract services, it’s 1099-NEC.

If you’re reporting rent or royalties, then it’s 1099-MISC. Using the wrong form may lead to IRS rejections or cause the contractor to file incorrectly.

❌ Entering incorrect TINs (Taxpayer Identification Numbers)

This is one of the most common and expensive errors. The IRS uses the recipient’s TIN to match reported income with their tax return. If the number is wrong or formatted incorrectly, your 1099 may be rejected or flagged.

You should always collect a Form W-9 from the contractor before making any payments to ensure you have accurate TIN and name info.

❌ Forgetting to file state 1099s (if required)

Some U.S. states have their own 1099 reporting rules. While federal filing is mandatory, state filing may also be required, depending on where your business is located and where the contractor resides.

Not all e-filing platforms handle this automatically, so it’s important to check your state’s requirements.

❌ Failing to report payments under $600 (when required)

While the $600 rule is standard for sending 1099s, all income is still taxable. If you’re the one receiving payments, and your client doesn’t send you a 1099 because it was under $600, you’re still legally required to report it as income.

From the payer’s side, if you break up payments to stay under $600 intentionally, the IRS may notice patterns over time.

❌ Sending the wrong copy to the wrong place

There are multiple copies of the 1099 form. For example: Copy A goes to the IRS.  Copy B to the contractor. Copy C is for your records. Copy 1 and 2 may be required for state reporting.

Mixing these up, or failing to send them where they belong, can create compliance issues, especially in case of an audit.

🔖 Related Read: 15 Tax Mistakes Every Business Must Avoid This Tax Season

Do You Need Software or a Tax Professional?

Yes, you absolutely do. 

These 1099 forms aren’t just about typing numbers into boxes, they’re packed with complex instructions, legal terms, and fine print that can trip up anyone who doesn’t have a tax or accounting background. 

And let’s be honest, no one wants to second-guess themselves when it comes to something as sensitive (and penalty-prone) as tax filing.

If you’re not familiar with tax codes, it’s very easy to miss a critical field, send the wrong copy to the wrong place, or enter something incorrectly. And that could lead to penalties, delays, or unnecessary stress.

These forms look simple, but the rules behind them are anything but.

That’s why it’s always smart to hand over these responsibilities to someone who does this all the time.

A tax expert who understands the system, knows what forms are needed for what kind of work, and can spot issues before they become problems. Especially if they’ve worked with entrepreneurs across industries, they’ll know the unique nuances and exceptions that apply to your case..

So, if you’re unsure, overwhelmed, or just want it done right the first time, don’t overthink it. Let a tax pro take over.

Let doola Handle Your 1099 Tax Filing

doola’s Tax Filing service is your go-to solution for tackling US federal and state tax compliance with ease, whether you’re an entrepreneur, a small business, or a non-US resident.

With dedicated CPA support and a smooth sync to doola’s bookkeeping platform, we make sure your tax filings are spot-on and submitted on time. This means you can steer clear of penalties and keep your eyes on growing your business.

What we offer:

🎯 Federal and State Tax Filings

🎯 Sales Tax Compliance

🎯 1099 Filings

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