Will the IRS Catch a Missing 1099? 2025 Guide

The IRS can catch a missing 1099 form as they receive copies from payers. If you forget to report it, you risk penalties and interest on unpaid taxes. To avoid this, report all income, even if you don’t receive a 1099. If you discover a missing form after filing, submit an amended return using Form 1040-X. Regularly check your records and contact payers for missing forms. Proactively managing your tax documents helps prevent audits and ensures compliance with IRS regulations. Report income accurately to avoid issues.

Expect to receive a 1099 form every January if you've earned dividends, received consultation fees, or worked as an independent contractor. If your form goes missing or you forget to file, the IRS can still detect it. This article explains what happens when a 1099 form is missing and how to handle it.

1099 forms can get lost or people may forget to file for several reasons. Your form might be issued late, sent to the wrong address, lost in the mail, or delayed by personal circumstances. Losing a 1099 form or forgetting to file does not automatically lead to penalties if you take corrective steps.

Do you need a 1099 form to file taxes?

The IRS requires a Form W-2 to be attached when filing your tax return. For 1099 forms, you only need to report the income amount. The IRS focuses on the information from the 1099, not the form itself. However, you should still report cash payments accurately.

If you don’t know how much income to report, call your client to request the missing data. Enter the correct amount when filing your tax return to ensure accuracy.

Request duplicate 1099 forms to keep proper records. Forms from different clients may look different, but as long as the information is correct, they are valid.

But what if you receive a duplicate and it contains errors?

After receiving your Form 1099-R, review it carefully. Errors in 1099 forms, such as incorrect income amounts, are common and can affect your tax filing.

In such cases, you need to let your client know about the error immediately. There’s normally enough time to correct an error before the IRS receives your form.

If your client already sent an incorrect 1099 form to the IRS, request that they resend a corrected one. The new 1099 must state that it is correcting a prior mistake. Submit the corrected form before the deadline to avoid a 1099 late filing penalty.

Types of 1099s

Understanding the 1099-NEC for independent contractors

The 1099-NEC form is used to report nonemployee compensation, primarily for freelancers and independent contractors. If you paid $600 or more to a contractor in 2024, you must file this form with the IRS and provide a copy to the contractor by January 31, 2025.

For example, if you hired a graphic designer and paid them $1,200 for a project, you need to issue a 1099-NEC. This form helps the IRS track income for individuals who don’t receive a W-2. Using accounting software like QuickBooks or FreshBooks can simplify generating and filing 1099-NEC forms.

To stay compliant, gather accurate taxpayer identification numbers (TINs) from contractors using Form W-9 before payments begin. This prevents delays and penalties. Filing electronically through the IRS FIRE system is recommended if you have more than 250 forms to submit.

How the 1099-MISC reports miscellaneous income

The 1099-MISC form reports various types of income not covered by the 1099-NEC, such as rent, prizes, or royalties. In 2024, businesses use this form to report payments like $600 or more in rent or legal settlements.

For instance, if you rent office space and paid $1,000 monthly to a landlord, you must file a 1099-MISC to report that rent. Similarly, if you awarded a prize of $1,000 in a contest, this form captures that income. Note that payments to contractors for services moved to 1099-NEC starting in 2020.

Ensure you differentiate between 1099-NEC and 1099-MISC to avoid filing errors. Many tax software platforms, including TurboTax and TaxAct, provide guidance on which form to use based on the payment type.

When to use 1099-DIV and 1099-INT for investment income

The 1099-DIV and 1099-INT forms report dividend and interest income, respectively. If you earned $10 or more in dividends or interest from investments in 2024, financial institutions will send you these forms by mid-February 2025.

For example, if you received $50 in dividends from stocks or $30 in interest from a savings account, you’ll get a 1099-DIV or 1099-INT. Freelancers and small business owners should include these amounts on their tax returns, even if they don’t receive a 1099 form directly.

Tracking these forms is vital to avoid underreporting income. Many banks and brokerages integrate with tax software like H&R Block or TaxSlayer, making it easier to import this information accurately.

Other less common 1099 forms to know

Several other 1099 forms serve specific purposes, such as 1099-R for retirement distributions or 1099-S for real estate transactions. These forms apply when you receive income from pensions, IRAs, or sell property.

For example, if you withdrew $5,000 from your IRA in 2024, you’ll receive a 1099-R detailing the taxable amount. Similarly, selling a home may generate a 1099-S if the transaction involves reportable proceeds. Understanding these forms helps freelancers and small business owners prepare for tax season.

Consulting with a tax professional or using comprehensive tax software can help identify which 1099 forms apply to your situation. Staying informed reduces the risk of missed income reporting and potential IRS penalties.

Who receives a 1099?

Independent contractors and freelancers

Independent contractors and freelancers receive a 1099 form when they earn $600 or more from a single client during the tax year. This form reports the income paid outside of traditional employee wages. For example, if you freelance as a graphic designer and a client pays you $1,200 in 2024, that client must send you a 1099-NEC form to report the payment.

Clients use the 1099-NEC form specifically to report nonemployee compensation, which covers most freelance and contractor payments. This differs from a W-2, which is for employees. Receiving a 1099 means you are responsible for reporting that income on your tax return and paying self-employment taxes, including Social Security and Medicare.

To stay organized, freelancers should track all payments throughout the year and confirm receipt of 1099 forms by January 31, 2025. Use tools like QuickBooks Self-Employed or FreshBooks to manage income and prepare for tax filing efficiently.

Small business owners and vendors

Small business owners often receive 1099 forms when they provide services or sell goods to other businesses without being employees. For instance, if your business sells $700 worth of consulting services to another company in 2024, that company must issue you a 1099-NEC.

Besides services, vendors who supply materials or rent equipment may also receive 1099 forms if payments exceed $600. However, payments made via credit card or third-party networks like PayPal are reported differently on Form 1099-K, not 1099-NEC.

Understanding these distinctions helps business owners ensure they report all income properly. Keeping accurate records and requesting W-9 forms from clients can simplify the 1099 process and avoid missing income or duplicate reporting.

Exceptions and special cases

Not everyone who receives payments gets a 1099 form. For example, employees receive W-2 forms instead, and corporations generally do not receive 1099-NEC for services rendered, except in some cases like legal fees. Payments to corporations are usually exempt from 1099 reporting unless they involve attorney fees or medical payments.

Additionally, rental payments, dividends, and interest income are reported on other types of 1099 forms like 1099-MISC or 1099-INT. It's important to identify the correct 1099 form based on the payment type to avoid confusion during tax filing.

Freelancers and small business owners should consult IRS guidelines or tax professionals to clarify if they should expect a 1099 form for specific income. This proactive approach helps prevent underreporting income and potential penalties.

Why the irs is likely to catch a missing 1099 form

Your client must send a copy of your 1099 form to both you and the IRS. Similar to W-2 forms, 1099 forms are normally submitted by January 31. If January 31 falls on a holiday or weekend, then the 1099 due date shifts to the next business day.

The 1099 copy that the IRS receives contains your Taxpayer Identification Number -- the exact number you use to file your returns. And since they get the 1099 form very early in the year, they have enough time to determine whether your reported income matches what your client reported.

Filing returns that don’t match the information the IRS records sends a red flag to the organization. What follows next? An IRS employee or agent examines you.

Note that the IRS doesn’t penalize you for reporting higher income than what you earned. What the organization considers a mismatch, though, is reporting lower income, so you can expect to receive a notice from them, as we’ll see later.

What happens if you don’t pay taxes for missing 1099 forms?

If you under-report your income, the IRS will send you a notice through the mail. Your notice may include interest on the amount you owe, and your interest may continue to accrue until you pay your owed amount in full. Depending on your tax situation, you will have to pay penalties. Congress recently increased the penalty for not filing 1099 tax returns.

All of this will be included in your notice.

Filing requirements for 1099 forms

Who must file 1099 forms in 2024

Businesses must file 1099 forms if they paid $600 or more to an independent contractor or vendor during the 2024 tax year. This applies to payments for:

• Services
• Rent
• Prizes and awards
• Other income payments

For example, if you hired a freelance graphic designer and paid them $1,200 in 2024, you are required to file a 1099-NEC form reporting those payments.

Corporations generally do not require 1099 forms except for payments related to legal services or medical and healthcare payments. This exception means if you paid a law firm $700 in 2024, you must issue a 1099 form even if the firm is incorporated. Keep in mind that payments made via credit card or third-party networks like PayPal are reported by those platforms and do not require a 1099 form from you.

To ensure compliance, track all payments throughout 2024 and verify the recipient’s taxpayer identification number (TIN) using Form W-9. This step helps avoid filing errors and IRS penalties. Use accounting software like QuickBooks or FreshBooks to simplify tracking and generate 1099 forms automatically when thresholds are met.

Deadlines and filing methods for 1099 forms

The deadline to file 1099 forms with the IRS for the 2024 tax year is January 31, 2025, whether you file electronically or by mail. This deadline applies to both furnishing copies to recipients and submitting forms to the IRS. Filing late can result in penalties starting at $50 per form, increasing with the delay.

Electronic filing is mandatory if you submit 250 or more 1099 forms, but the IRS encourages all filers to use the FIRE (Filing Information Returns Electronically) system. Smaller filers can mail paper forms to the IRS, but must use official red-ink forms obtained from the IRS or approved vendors. Sending copies to contractors by mail or secure email is required by the deadline.

To avoid last-minute issues, prepare 1099 forms early by collecting W-9 forms from contractors before year-end. Many freelancers use services like Tax1099 or Track1099 to file electronically. This reduces errors and confirms receipt. Planning ahead ensures you meet deadlines and keep your business compliant.

Exceptions and special cases in 1099 filing

Not all payments require a 1099 form. Payments to employees should be reported on a W-2, not a 1099. Additionally, payments for merchandise, utilities, or telephone services typically do not require 1099 reporting. Understanding these exceptions helps avoid unnecessary filings and confusion.

State-specific rules may affect filing requirements. For example, California requires businesses to file 1099 forms with the Franchise Tax Board if they meet federal thresholds. Some states have their own deadlines and electronic filing mandates. Check your state’s tax agency website for details. This is especially important for freelancers and small businesses operating in multiple states.

Finally, if you made payments to foreign persons or entities, different reporting rules apply, often involving Form 1042-S instead of a 1099. Consulting a tax professional or using specialized software can help you navigate these complexities and ensure accurate reporting.

How to amend tax returns?

Suppose you find an error after you’ve filed your returns, but you haven’t received a notice from the IRS yet. You don’t have to panic. The solution lies in a simple document: the Form 1040-X.

Form 1040X lets you correct tax returns that you’ve previously filed, keeping you safe from the IRS’ hefty fines for underreporting your income.

To amend 1099 tax returns, follow this process:

• Fill Form 1040-X with all the correct details
• Include a copy of your 1099 form
• Ensure you include payment of what you owe the IRS
• If you’re amending multiple returns, prepare a separate form for each one of them
• If you’re still expecting a tax refund from your previously filed returns, don’t fill the form immediately -- wait until you get your return

Previously, you had to amend returns manually on paper, regardless of whether you filed your previous returns electronically. However, the IRS now allows taxpayers to amend their returns using PCs or smartphones, eliminating the hassle of mailing your Form 1040-X.

How to update a 1099 form for your tax return

If you’re self-employed or worked as an independent contractor, you can expect to receive Form 1099-NEC (previously Form 1099-MISC). The income you receive is referred to as "nonemployee compensation".

Here are the conditions you and your clients must meet:

• Condition 1
• Condition 2
• Condition 3

• Your client should submit a Form 1099-NEC if they paid you over $600 in the previous tax year
• If you’re an independent contractor, you need to report income from self-employment if the sum you earned from all sources is over $400

You'll still need to file a 1099 under $600 if you didn't receive a form. If you’re missing a form 1099 reporting your self-employment income, you’ll need to update Form 1040-ES. The form shows your income and the self-employment tax you’re subject to; it allows you to figure and pay your estimated tax.

Requirements to pay quarterly taxes

You may need to pay estimated taxes if you’ve earned income that’s not subject to withholding. This may include:

• Self-employment income
• Interest and dividends
• Rental income
• Other miscellaneous income

• Rental Income
• Dividends
• Capital gains
• Miscellaneous income
• Profit from selling stocks
• Taxable alimony

Typically when you’re an employee, your employer withholds a certain tax amount from every paycheck and pays the IRS and sometimes the state government too. You’re essentially paying your taxes as you earn, or in simple terms, paying ‘’as-you-go”.

You often split your Social Security Tax 50/50 with your employer, meaning half of your taxes are paid through payroll withholding while your employer pays the remaining half.

When you’re an independent contractor, you act as both the employee and the employer. The result? You have to pay both halves. The good news, though, is that you can easily get a deduction for one-half of the taxes you owe.

To determine your estimated tax, you need to get a sum of your tax liability for the year then divide the resulting figure by four. Your tax liability can include self-employment taxes, income taxes, among others. You can easily calculate self-employment tax due by using our free calculator.

It can be a great idea, when estimating taxes to use your earned income and claimed deductions for the previous tax year as a starting point. The Form 1040-ES contains a worksheet that can guide you when making your calculations.

If you estimate your taxes either too high or too low, you’ll need to refill another Form 1040-ES worksheet to get a more accurate figure. If you provide inaccurate income details to the Internal Revenue Service, you might get slapped with costly fines.

in order to avoid a tax underpayment penalty, the IRS requires you to report estimated taxes that are at least 90% of your real tax liability -- or either 100% or 110% of your previous year’s liability, depending on your level of adjusted gross income. If you fail to do so, then the organization will charge you interest on the amount you owe.

What is a 1099 form?

Understanding the purpose of a 1099 form

A 1099 form is a tax document used to report income earned outside of regular employment. Freelancers, contractors, and small business owners receive this form when they earn $600 or more from a client or company during the tax year. It helps the IRS track income that isn’t reported on a traditional W-2 form.

For example, if you did freelance graphic design work for multiple clients in 2024 and earned over $600 from each, those clients must send you a 1099-NEC form. This form reports the exact amount paid, which you then use to file your income taxes. The 1099 form ensures that all income is properly documented and taxed.

To stay compliant, keep accurate records of your payments throughout the year. Tools like QuickBooks Self-Employed, FreshBooks, or Bonsai Tax can help you track income and generate reports that simplify tax filing. Understanding the purpose of the 1099 form helps you prepare for tax season and avoid surprises from the IRS.

Different types of 1099 forms freelancers should know

There are several types of 1099 forms, but freelancers most commonly encounter the 1099-NEC and 1099-MISC. The 1099-NEC reports non-employee compensation, such as payments for freelance work or independent contracting. The 1099-MISC covers miscellaneous income like rent, prizes, or royalties.

For instance, if you rent out equipment for your business, you might receive a 1099-MISC from the renter. In contrast, if you completed a project for a client, they would send you a 1099-NEC. Both forms must be reported on your tax return, but they serve different income categories.

Make sure to review each 1099 form carefully when you receive it by January 31, 2025, for the 2024 tax year. If you notice errors or missing forms, contact your client immediately to correct the issue. Accurate 1099 forms help you avoid IRS penalties and ensure your taxes are filed correctly.

How to use a 1099 form when filing taxes

When filing your 2024 taxes, you use the information on your 1099 forms to report your income accurately. The IRS requires freelancers to report all income, even if you don’t receive a 1099 form for every client. This means keeping detailed records of all payments received.

You will typically enter your 1099 income on Schedule C (Profit or Loss from Business) if you are self-employed. This allows you to deduct business expenses and calculate your net profit. For example, if you earned $10,000 reported on 1099-NEC forms and had $3,000 in deductible expenses, you only pay taxes on the $7,000 net income.

Using tax software like TurboTax Self-Employed or H&R Block can simplify this process by importing 1099 data directly. Additionally, consider consulting a tax professional if your income sources are complex. Properly using your 1099 forms ensures you comply with tax laws and maximize your deductions.

Why you might receive an audit notice from the internal revenue service

Often, you’ll receive a normal CP11 notice if you file returns with missing 1099s. But in more severe cases, the IRS might notify you that they want to “examine” you, which means you’re getting an audit.

The chances of the IRS auditing you are naturally very low if you’ve only lost a 1099 form. There’s a possibility, however, that your unreported income might be too high for the organization to ignore, as it’s raising serious red flags. If the IRS looks further into your filed returns and discovers more errors, you may be more likely to receive an IRS audit.

The Internal Revenue Service identifies taxpayers to audit generally using three methods:

• Random Method -- An IRS employee selects you either completely randomly or by looking into your returns and discovering that they often contain too many errors.
• Document-match selection -- If you file returns without submitting required documents, such as W-2s, you may increase your potential for getting an audit.
• Related examination -- If your returns report transactions with partners, investors, or stakeholders who the IRS have previously audited, then you may be in line for an audit as well.

On top of these methods, the IRS uses a computer program referred to as the Discriminant Inventory Function System (DIF). Whenever you file returns, the program assigns a numeric score that determines whether or not you’re safe from examinations. The higher your score, the more you’re likely to get a visit from an IRS agent.

Civil and criminal fraud investigations

IRS fraud investigations are very rare, especially for taxpayers who have lost their 1099 forms. If you’re missing a 1099 form due to forgetfulness or poor documentation, you likely won't face fraud investigations.

However, if you’re using your missing 1099 form as an excuse to intentionally under-report your income, then you might answer either criminal or civil charges.

Civil charges can attract a penalty of up to 75% of your underpayment. This means that, on top of the taxes and interest you owe, you must pay a 75% tax penalty if the IRS determines you committed civil fraud.

For criminal fraud, the penalties are steeper. If convicted of criminal tax fraud, you may face up to five years in prison and a $250,000 fine. However, criminal investigations are rare for a missing or lost 1099 form.

What can trigger such an investigation is either a taxpayer attempting to defraud the government or evading or avoiding to pay taxes on 1099 income intentionally.

Final thoughts

The IRS is likely to catch a missing 1099 form. Using their matching system, the IRS can detect errors in your returns. They also receive a copy of your 1099 form, so they know exactly how much you owe in taxes.

Keep all your records safely. If you notice mistakes in your 1099s, amend your tax returns immediately.