Annual tax document issued to independent contractors and other non-employees who received payments during the tax year.
Form 1099 is the IRS document used to report payments to non-employees. The most common variant is 1099-NEC (Nonemployee Compensation), used to report payments of $600+ to independent contractors during the tax year. Other variants include 1099-MISC (miscellaneous income), 1099-DIV (dividends), 1099-INT (interest), and 1099-K (third-party network payments).
Critical distinction: 1099 recipients are NOT employees. They handle their own self-employment tax and don't receive employer-provided benefits or workers comp coverage. Misclassifying a worker as 1099 when they should be W-2 is one of the most common payroll compliance violations.
PEOs typically do not process 1099 contractors — the co-employment arrangement only applies to W-2 employees. 1099 contractors stay outside the PEO relationship entirely.
Annual tax document issued to independent contractors and other non-employees who received payments during the tax year.
Form 1099 is the IRS document used to report payments to non-employees.
Most PEO buying decisions touch several related concepts at once. Form 1099 typically comes up alongside the other terms in this category. Closely related terms include Form W-2 (Wage and Tax Statement), Independent contractor, Worker classification.
This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.
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