1040 Forms vs. 1099 Forms — What's the Difference?
Edited by Tayyaba Rehman — By Fiza Rafique — Published on November 29, 2023
1040 Forms are for individuals to report their annual income; 1099 Forms are given to non-employees showing income earned from a specific payer.
Difference Between 1040 Forms and 1099 Forms
Table of Contents
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Key Differences
1040 Forms are used by individual taxpayers in the U.S. to report their annual income to the Internal Revenue Service (IRS). It's the primary form that personal taxpayers use to file their federal income tax returns, detailing their earnings and specifying deductions and credits. On the other hand, 1099 Forms are provided to individuals by payers, such as companies or individuals, as a record of non-wage income earned during the year.
While 1040 Forms encompass various types of income, adjustments, deductions, and credits, providing a comprehensive view of an individual's financial picture, 1099 Forms are more specific. They are used to report various types of non-wage income like earnings from freelance work, interest, or dividends. Essentially, while the 1040 Forms tell the IRS about an individual's overall financial picture, the 1099 Forms indicate specific streams of income from non-traditional employment or investments.
It's important to note that receiving a 1099 Form doesn't necessarily mean one owes taxes on that income. When filing taxes, individuals will include the information from their 1099 Forms on their 1040 Forms. Then, the total income from various sources, along with deductions and credits, will determine any tax owed.
Furthermore, while the 1040 Forms are submitted by taxpayers to the IRS, the 1099 Forms are provided to taxpayers by those who've paid them. Moreover, the payer also sends a copy of the 1099 to the IRS. This way, the IRS can match the reported income on the 1040 with the amounts on the 1099 Forms to ensure accurate tax reporting.
In summation, 1040 Forms and 1099 Forms are integral components of the U.S. tax system. The 1040 provides a holistic view of an individual's income and tax situation, whereas the 1099 captures specific non-wage income sources.
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Comparison Chart
Purpose
Report personal annual income to IRS
Report specific non-wage income to the recipient
Issued By
Individual taxpayer
Payer (e.g., company, individual)
Income Types Covered
Various (wages, interest, dividends, etc.)
Non-wage income (e.g., freelance, interest)
Submission
Submitted by individual to IRS
Given to taxpayer by payer; copy sent to IRS
Associated Tax Payment
Determines tax owed based on total income and deductions
Indicates income, not necessarily tax owed
Compare with Definitions
1040 Forms
Submitted annually to the IRS.
It's tax season, so I need to complete my 1040 Forms.
1099 Forms
Reports non-wage income to recipients.
As a freelancer, she received several 1099 Forms.
1040 Forms
Used to report various types of income.
On his 1040 Forms, he included his wages and interest income.
1099 Forms
Used for various income, like freelance or dividends.
Her stock dividends were listed on a 1099 Forms.
1040 Forms
Primary personal income tax return form.
She filled out her 1040 Forms to report her yearly earnings.
1099 Forms
Not a tax bill but an income report.
Receiving a 1099 Forms doesn't mean he owes that amount in taxes.
1040 Forms
Considers deductions and credits.
After accounting for deductions on her 1040 Forms, she received a refund.
1099 Forms
A copy is also sent to the IRS.
The company sends 1099 Forms to both the contractor and the IRS.
1040 Forms
Can be supplemented with additional schedules.
Given his rental income, he attached Schedule E to his 1040 Forms.
1099 Forms
Issued by payers of specific income types.
The bank sent him a 1099 Forms for his savings account interest.
Common Curiosities
Can I file my taxes without a 1040 Form?
No, the 1040 Forms is the standard personal income tax return form.
What is the primary use of 1040 Forms?
1040 Forms are used to report an individual's annual income to the IRS.
Do I always owe taxes if I get a 1099 Forms?
Not necessarily; the 1099 Forms reports income, but deductions may offset taxes owed.
Do I need to attach schedules to my 1040 Forms?
Depending on your income sources, you might need to attach additional schedules.
Where do I report income from a 1099 Forms on my tax return?
Income from 1099 Forms is reported on your 1040 Forms in the appropriate sections.
Is there a penalty for not filing 1040 Forms?
Yes, there can be penalties and interest for not filing or late filing.
How many types of 1099 Forms are there?
There are various 1099 Forms types, like 1099-MISC, 1099-INT, based on income type.
Why would someone receive a 1099 Forms?
1099 Forms are received when one earns non-wage income, like from freelancing or investments.
Who sends out 1099 Forms?
Payers of specific income types, like companies or individuals, issue 1099 Forms.
If I make an error on my 1040 Forms, what should I do?
You can file an amended return using Form 1040-X.
How do I know which 1040 Form to use (e.g., 1040EZ, 1040A)?
The complexity of your finances determines the form. However, as of 2018 tax year, only the standard 1040 is used.
Is it possible to e-file 1040 Forms?
Yes, many individuals e-file their 1040 Forms for convenience.
Are all 1099 Forms income subject to self-employment taxes?
Not all. While some 1099 income may be, others, like dividends, aren't.
Why might I get multiple 1099 Forms?
If you earned income from multiple sources or payers, you'd receive multiple 1099 Forms.
Do I need to send the 1099 Forms to the IRS?
No, the issuer sends a copy to both you and the IRS.
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Written by
Fiza RafiqueFiza Rafique is a skilled content writer at AskDifference.com, where she meticulously refines and enhances written pieces. Drawing from her vast editorial expertise, Fiza ensures clarity, accuracy, and precision in every article. Passionate about language, she continually seeks to elevate the quality of content for readers worldwide.
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
