1040 vs. 1099: Tax Forms Explained

One is the master tax return, and the other is an information form

A couple review their tax forms while sitting in their kitchen drinking coffee and looking at a laptop and papers
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Figuring out which forms to use at tax time can be a challenge, especially if this is the first year you've earned income that must be reported on a 1099 form. Reporting this type of income is a bit more complicated than reporting W-2 income like wages or a salary from employment.

But comparing Form 1040 and Form 1099 is pretty straightforward. The first thing to understand is that Form 1040 is the master sheet tax return that includes information from all other tax forms, including all types of 1099 forms.

Let's dive into the differences between Forms 1040 and 1099 and how you'll use each one to file your taxes.

Key Takeaways

  • Forms 1099 report non-employee income to the recipient of the money and to the IRS.
  • Income reported on a 1099 is then entered on Form 1040 with several other financial details to determine whether you owe tax or can expect a refund.
  • All taxpayers must file a 1040 if they earn more than a certain threshold of income. But only those with sources of non-employee income will receive a 1099.
  • There are numerous types of 1099 forms, each dedicated to a different type of income, such as interest, dividends, Social Security benefits, or income from self-employment.

What Is Form 1040?

Form 1040 is the main tax form that taxpayers use to report their incomes each year. You'll include all income and claim tax credits and deductions on this form to determine whether you owe taxes or if you'll get a refund. It will tell you how much you'll pay or get back.

Form 1040 is only two pages long. It comes with three schedules that break down your taxable income, credits, and deductions in much more detail.

Note

You'll have to make calculations using various other tax forms, including supporting forms called schedules, to report your income and deductions on Form 1040 accurately.

On the first page, you'll fill in lines 1 to 8 with the different types of income you received, including earned income, interest, Social Security benefits, and retirement plan distributions. They're added together on line 9 to arrive at your total income.

Lines 10 and 11 adjust this number to arrive at your adjusted gross income after other, less common sources of income are added in and certain adjustments are claimed to subtract from this amount. This information is entered on Schedule 1 and then transferred to your Form 1040.

Then you'll subtract the standard or your itemized deductions on line 12a. Claiming itemized deductions involves completing and submitting Schedule A to list them and total them. You can't both itemize and claim the standard deduction. You must choose one option or the other. It only makes sense to take the one that subtracts the most from your income, reducing the amount you'll pay taxes on.

Note

The 2020 and 2021 Forms 1040 also include line 12b, but this is a temporary adjustment. The IRS is allowing an extra deduction for cash contributions of up to $300 to charities in response to the ongoing COVID pandemic. This increases to $600 if you're married and filing a joint tax return. You don't have to itemize all your deductions to claim this adjustment to income. You don't have to include it on Schedule 1.

Add in any qualified business income you may have had on line 13 from your adjusted gross income to find your taxable income. Your total taxable income appears on line 15 after leaving a line for calculations.

Lines 16 through 24 on the second page of Form 1040 add up various taxes you might owe on all your sources of income. The total is amount of tax you owe on all of your income. Next, lines 25 through 30 list any taxes you've already paid, such as through withholding from your paychecks or estimated tax payments you made, as well as tax credits you can claim. These are totaled on lines 32 and 33.

You'll receive a tax refund if the amount on line 33 is greater than the amount that appears on line 24. The amount appears on line 34. You owe tax if the amount on line 33 is less than the amount on line 24.

What Is Form 1099?

There are several types of Form 1099. Each one is used to report a certain type of income other than salary or wages.

Form 1099-NEC is used to report independent contractor income earned as a freelancer or self-employed worker. It's the equivalent of the W-2 you'd receive as an employee, but taxes aren't typically withheld. You'll receive one from any client that paid you $600 or more during the year. This means $600 total. You'll receive one if you were paid $299 in August and $300 in December, even though neither payment tops the $600 threshold by itself.

Other common types of 1099s include:

  • Form 1099-INT, which reports taxable interest income
  • Form 1099-DIV, which reports dividend income
  • Form 1099-B, which reports capital gains and losses
  • Form 1099-MISC, which reports rental, royalty, and other miscellaneous types of income

Anyone who received income from anything other than a typical employee/employer relationship might receive a 1099.

Form 1040 vs. Form 1099: The Big Difference

The key difference between these forms is that Form 1040 calculates your tax or refund. It includes multiple details about your personal tax situation. Forms 1099 report only one source of income. You won't know if you owe taxes on that money or if you can expect a refund until you include that 1099 information on your Form 1040.

Note

Most people who file a tax return will use Form 1040. Some seniors may file a 1040-SR instead. Only people who have earned income other than a salary or wages will receive a Form 1099.

Let's say you sell insurance. You received commissions of $10,000 from each of five different insurance carriers. You would receive a 1099-NEC from each company showing how much you earned. You would then report $50,000 of self-employment income on your Form 1040.

Tax forms like 1099s are supplemental. You'll use them to make calculations to determine the key numbers to enter on your Form 1040. The 1040 is the final tax form that shows the overall picture of your income, deductions, and tax credits for the year.

What To Do With These Tax Forms

Store your 1099s in a secure place when you receive them so you can easily find them when it's time to prepare your taxes. The tax software should automatically input your tax data into a 1040 if you use a program. You'll enter your 1099 information, and the software will take things from there.

Frequently Asked Questions (FAQs)

Is Form 1040 hard to fill out?

Completing a 1040 tax return can be a complicated challenge because you might have to file additional forms and schedules along with it. But tax preparation software streamlines the process a great deal. It simply asks you some questions then uses your answers to include the information on your tax return and on any other required schedules or forms.

Do I have to file my 1099 forms with my tax return?

No. It's not necessary to include the forms when you file your return because the IRS already has the information. Payors are required to provide a copy of the form to both the recipient of the money and the IRS.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "Tax Year 2021 1040 (and 1040-SR) Instructions," Page 3.

  2. IRS. "The IRS Encourages Taxpayers to Consider Charitable Contributions."

  3. IRS. "Form 1040 U.S. Individual Income Tax Return."

  4. IRS. "Instructions for Forms 1099-MISC and 1099-NEC (2021)."

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