In a layperson’s language, we can define IRS Form 1099 as a document entailing the details of all income that an American citizen earns in one financial year, apart from their regular salary. The form is sent to the Internal Revenue Service, which then compares its own data with the information on IRS Form 1099, W-2, and Forms 1040 to delegate if an individual owes the state any tax money. In addition, taxpayers must report all their ancillary incomes, such as interest from banks, dividends from investments, compensation for freelance, etc., to the IRS to avoid an audit. There are 21 variants of the IRS Form 1099, among which one of the most popular ones is the self-employed 1099 form, or Form 1099-MISC.

As per the IRS mandates, any freelancer, independent contractor, or self-employed individual is regarded as an employee. A 1099 form is entirely distinct from a W-2 form. If an employer sends an individual the 1099 form, it is a sign that they see the employee as an independent contractor, not a regular employee. W-2 employees have their taxes withheld when they are paid wages. However, the 1099 self-employed individuals have to figure out their tax burden themselves, just like a small business would. Now that we know about the basics of 1099-employment let us understand the types of IRS Form 1099.

Five Types of IRS Form 1099 that Everyone Should Know About 

Although there are 20 different variants of Form 1099, only a few are essential for general taxpayers.

1. IRS Form 1099-MISC – It is a tax form used to report miscellaneous compensation such as rent, prizes, awards, healthcare payments, payments made to an attorney, and so forth. Before 2020, the IRS Form 1099-MISC was also used for reporting non-employee compensation for freelancers and independent contractors.
   
2. IRS Form 1099-NEC – From 2020 onwards, the Form 1099-NEC, also deemed the self-employed 1099-form, is utilized for reporting non-employee compensations for freelancers, sole proprietors, independent contractors, and self-employed persons. It is noteworthy to remember that businesses and organizations send the form to independent contractors whom they have paid more than USD 600 a year.
   
3. IRS Form 1099-INT – It is a tax form that American citizens use to report interest income. All organizations that pay investors interest income at the end of the year use this form. An interest income breakdown is shown on the Form 1099-INR. Therefore, it is imperative for payers to issue the form to any party to whom they paid a minimum of USD 10 as interest during one financial year.
   
4. IRS Form 1099-DIV – It is a tax form given by financial institutions and banks to investors who earn dividends and distributions from any investment made throughout the year.
   
5. IRS Form 1099-GOV – It is a tax form filed by the federal, state or local government for certain payments made to taxpayers. Some of the compensations under the form include unemployment pension, payments made on Commodity Credit Corporations loans, and likewise. 

So, there we have it, the five types of IRS Form 1099 that every American citizen should know about. Although when it comes to freelancers and business personnel, the self-employed 1099-form is of utmost importance.