Form 1099

A 1099 reports income paid to someone who isn't an employee — contract work, interest, dividends, brokerage proceeds. The defining feature is that nothing is withheld, so the tax is entirely your problem and usually due quarterly. Being 'a 1099' rather than 'a W-2' also means paying both halves of payroll tax, which is why an equivalent contract rate must be meaningfully higher than a salary to break even.