How To Understand The Different Types of 1099 Forms
If you’re self-employed, then you know that you’ll receive 1099 forms to file your taxes every year. But did you know that there are different types of 1099 forms? I didn’t realize this until recently, and this knowledge about these forms can make tax preparation more efficient. Let’s discuss the different types of 1099 forms.
1099-DIV
Not many people know about this 1099 form, but if you receive dividends from your stock investments, those dividends are taxable according to the IRS. You’ll need to report your dividend income on Schedule B on your 1040 form if you earned more than $1500 in taxable dividends. Most of your dividends will be taxed at an ordinary tax rate, but if you have qualified dividends, those are taxed at a lower capital gains rate. For a dividend to be qualified, you must have held the stock for at least 60 days out of a 121-day period that begins 60 days before the ex-dividend date.
1099-NEC
This is the main 1099 form that most self-employed persons receive every year. Freelancers and independent contractors also often receive the 1099-NEC form. You’ll report your self-employment income and expenses on Schedule C on your 1040 tax form.
