Form 1099 is the IRS matching backbone. Each variant has a payer, payee, threshold, and deadline.
- 1099-NEC: nonemployee compensation $600+, Schedule C, SE tax, due January 31
- 1099-MISC: rents and prizes $600, royalties $10, attorney gross proceeds $600
- 1099-K: third-party network. 2025 threshold $2,500 (transition); 2026 drops to $600. Personal Venmo gifts are excluded
- 1099-INT and 1099-DIV $10, 1099-B any broker sale, 1099-R $10 retirement, 1099-S real-estate proceeds, 1099-C $600 cancellation of debt, 1099-G unemployment and state refunds
A taxpayer who paid $600+ to a contractor in a trade or business must issue 1099-NEC. §6721 penalties run $60 to $330 per form; intentional disregard runs $660+ uncapped.
Both parties recognize income at fair market value (FMV) of what they received. Service-for-service goes on Schedule C if in a trade or business, otherwise Schedule 1 line 8z. Organized barter exchanges issue Form 1099-B to members showing trade-credit dollars, recognized when credits are received (not spent). SE tax applies if the barter is in the taxpayer's trade or business.
Common mistakes
- Treating 1099-K personal Venmo payments as taxable; gifts and reimbursements among friends are not income
- Missing the Form 8300 trigger when cash arrives in installments; the test is aggregate over 12 months from one buyer
- Claiming §121 twice within two years; the once-per-2-year rule blocks the second exclusion absent qualifying hardship
Bottom line
- 1099-NEC at $600 nonemployee comp; 1099-MISC at $600 rents and $10 royalties; 1099-K at $2,500 for 2025, dropping to $600 in 2026
- §6721 intentional-disregard penalty runs $660+ per form and is uncapped
- Bartering is taxable at fair market value; barter exchanges issue Form 1099-B
- Form 8300 when a trade or business gets more than $10,000 cash from one buyer; due in 15 days
Exam shortcut
1099-K below the year's threshold or a personal payment is not taxable unless income otherwise existed "Trade or business" plus "cash" plus more than $10,000 from one buyer means Form 8300 within 15 days Art, gold, antiques, or gems held more than one year are taxed at min(28%, ordinary rate), never at 15/20%
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Learning objectives
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