Why 1099s exist

W-2s cover employees. 1099s cover just about everyone else — freelancers, gig workers, investors, and people who got money from the government. Each type of income has its own 1099 flavor.

The common flavors

1099-NEC — Nonemployee Compensation

The one gig workers and freelancers see most. Sent by clients who paid you $600 or more for services during the year. This income flows onto Schedule C and is also hit with self-employment tax.

1099-MISC — Miscellaneous

Rent, prizes, royalties, and some legal settlements. Less common than it used to be now that freelance work moved to the NEC.

1099-INT — Interest

From banks or credit unions when you earned $10+ in interest. Add it to your taxable income.

1099-DIV — Dividends

From stocks, mutual funds, or ETFs. Qualified dividends get a lower tax rate; ordinary dividends are taxed like normal income.

1099-K — Payment Card / Third-Party Network

From PayPal, Venmo (business), Etsy, Uber, DoorDash, etc. Thresholds have been shifting, but if you're running any kind of side hustle, expect one.

1099-G — Government Payments

Unemployment benefits and state tax refunds (only taxable if you itemized last year).

Why there's no withholding

Employers withhold tax from W-2 paychecks automatically. Payers of 1099 income don't. That means you have to set money aside yourself and, in most cases, pay quarterly estimated taxes so you don't owe a huge bill (plus penalties) in April.

Missing a 1099?

The income is still taxable even if the form never shows up. Use your own records — bank deposits, payment app history, invoices — to report what you actually earned.