Mailboxes in January fill up with lots of tax forms, and you should pay attention to all of them. OnlyFans models and other content creators can expect to receive a 1099 Form showing the income. In this post, we’ll answer, “what is a 1099 form?” and explain what you should do with these forms when you receive them.
What is a 1099 Form?
An IRS 1099 Form shows payments from an individual or a business that isn’t your employer. You can receive 1099 forms for many different types of income, including independent contractor wages, rental income, and more.
The payer is responsible for sending out 1099 Forms since they made the payments and will likely claim a deduction on the expense. However, they must also send copies to the recipient and the IRS to ensure everyone has the same info.
If you receive any 1099s, you must include the income on your tax return. The IRS also gets a copy, so make sure your reported totals match what’s listed on the form. If there are any discrepancies, contact your employer right away to request an amended 1099 with the correct information.
Will I Get a 1099?
Many types of income report on 1099s, including dividends, interest, rental income, independent contractor work, business transactions, or miscellaneous income. Other common triggers for 1099s are gambling earnings or social security income.
Companies issue a 1099 to any independent contractor who earns $20,000 or more in a given year. However, starting in 2024 you will get a 1099 if you make $600 or more during the year. In addition, payment processing companies (such as Paypal or Venmo) are will also be required to issue 1099s for businesses that receive more than $600 in payment during the year, starting with the 1099s you will receive in 2024.
If you work as an independent contractor and have multiple clients, each client will issue you a separate 1099. It’s your responsibility to keep track of your 1099s and ensure they are all included on your tax return.
Most Common 1099s for Content Creators
Most content creators get one of these three types of forms:
1099-NEC
This is the most common type of 1099 content creators receive. NEC stands for non-employee compensation.
The form will contain your identifying information, including your name, address, and tax id. Your tax id may be either a social security number or an employer identification number (EIN) if you’ve chosen to register for a separate EIN from the IRS.
Most 1099-NECs will contain a total figure for non-employee compensation during the year in box 1. On rare occasions, your client may need to withhold federal and state taxes, which should appear in boxes 4 and 5, respectively. Tax withholding generally only occurs if you have provided incorrect identifying information to your client.
Filing Tips
The amount on Form 1099-NEC reports as income on your tax return. Therefore, you should review each form you receive for accuracy and completeness.
1099-K
Third-party payment processors issue 1099-K forms. For example, this can be merchant service accounts for credit card processing or online payment processors such as Venmo or Paypal.
Box 1a will include the gross payment amount processed through the third-party processor. Boxes 5a-5l contain the breakdown of the payments by month.
The number of payments processed is listed in box 3 and is for informational purposes only.
Starting in 2023 (for the year 2022), companies must issue 1099-Ks for anyone who processes $600 or more through any platform. Though not required, some payment processors will issue 1099-Ks for any amount, even if the total does not exceed $600.
Filing Tips
The key figure on Form 1099-K is the amount in Box 1a, which is the gross amount of transactions processed on your behalf.
Note that the figure may include processing fees and commissions, which can be deducted as business expenses on your return.
Other Types of 1099s
Here are a few other 1099 varieties you might encounter.
1099-MISC
Before the creation of 1099-NEC, most content creators received 1099-Misc. However, since the 1099-NEC covers most independent contractor and freelance work, few content creators receive these forms now.
However, if you receive royalty payments for your work, it would appear on a 1099-MISC. You might also receive a 1099-MISC if your work wins an award with a cash prize.
Like the other types of 1099s discussed above, a 1099-MISC is only mandatory if your income is over $600.
1099-NEC vs 1099-K
The biggest difference between why someone receives a 1099-NEC and a 1099-K is how your payments process. If you receive direct payments from a company for your content, then you would receive a 1099-NEC. If you receive payments through a third-party processor, you will receive a 1099-K.
There is no advantage to receiving one type of form over another. You must report all income on your tax return regardless of the form it is on.
General 1099 Filing Tips
Make sure the totals you report on your tax return match your 1099 forms EXACTLY.
The IRS also gets a copy of every 1099 you receive. If the totals don’t match, you will likely receive an IRS inquiry that could become an audit if they find discrepancies.
If you’re expecting a 1099 and didn’t receive one, follow up with your client, so you can make sure your reported income totals match what your client has on file. Even if you don’t receive a 1099, make sure you report all income. You still have to report the income if you didn’t receive a 1099.
Final Thoughts
1099 Forms are helpful when filing your tax return. They allow you to see what income the IRS sees, so you can ensure that it is on your tax return. The forms also allow you to spot errors and request that the issuers correct the form.
Understanding the difference between the forms is key to ensuring that the income reports correctly on your tax return to avoid issues with the IRS.
Get Help at 1099 Time
OnlyTaxes specializes in tax preparation for content creators and independent contractors. Our veteran tax pros have decades of combined experience, and they can save you thousands on your annual tax bill. Connect with a tax expert now to set up a one-on-one strategy session, and find out how much you can save with OnlyTaxes.
