1099 Forms & US Tax Documents Explained
If you work with US clients or operate a US entity, you may encounter various IRS information returns. This guide explains what they are and what they mean for you.
Important: This content is for informational purposes only and does not constitute tax advice. Tax laws are complex and change frequently. Always consult a qualified CPA or tax attorney for advice specific to your situation.
1. What Are 1099 Forms?
Form 1099 is a series of IRS "information returns" used to report various types of income other than wages, salaries, and tips. When a US person or entity pays you for services, they may be required to report those payments to the IRS using a 1099 form.
Key points about 1099s:
- They're information reports — they tell the IRS what you were paid
- The payer issues them — you don't create your own 1099
- They're due by January 31 — for payments made in the previous year
- Copies go to you and the IRS — so both parties have the same information
2. 1099-NEC: Non-Employee Compensation
Most common form for freelancers and contractors
What it reports: Payments of $600 or more to non-employees for services performed in a trade or business.
Who receives it: Independent contractors, freelancers, consultants, and other self-employed individuals who provide services to US businesses.
Example: A US company pays a contractor $5,000 for software development. The company issues a 1099-NEC to the contractor.
Note: Before 2020, this type of payment was reported on 1099-MISC Box 7. The IRS reintroduced the separate 1099-NEC form starting with tax year 2020.
3. 1099-MISC: Miscellaneous Income
What it reports: Various types of miscellaneous income including:
- Rent payments ($600 or more)
- Royalties ($10 or more)
- Prizes and awards
- Medical and healthcare payments
- Attorney fees
Who receives it: Landlords, authors receiving royalties, prize winners, and others receiving miscellaneous income.
4. 1099-K: Payment Card and Third-Party Network Transactions
For payments through Stripe, PayPal, and similar platforms
What it reports: Gross payments received through payment settlement entities (PSEs) like PayPal, Stripe, Venmo Business, Square, etc.
Current threshold (2024+): The IRS has been adjusting thresholds. Check current IRS guidance for the applicable reporting threshold.
Important: 1099-K reports gross payments, not net. It doesn't account for refunds, fees, or chargebacks — those are tracked separately for tax purposes.
For international sellers: If you provided a W-8BEN to Stripe/PayPal, you typically won't receive a 1099-K since it's for US persons. However, the platform may still report your information differently.
5. 1042-S: Foreign Person's US Source Income
The form foreign persons typically receive instead of 1099
What it reports: Payments made to foreign persons that are subject to withholding, including:
- Dividends
- Interest
- Royalties
- Certain service payments
Who receives it: Foreign persons (individuals or entities) who received US-source income subject to withholding.
Key information shown:
- Gross income paid
- Tax withheld
- Tax rate applied
- Whether treaty benefits were claimed
6. Do Foreign Persons Receive 1099s?
Short answer: Generally, no.
If you properly submitted a W-8BEN or W-8BEN-E certifying your foreign status, you should not receive a 1099. The payer uses your W-8 to determine that standard 1099 reporting does not apply to you.
What happens instead?
- If withholding applies: You may receive Form 1042-S showing the payment and any tax withheld
- If no withholding: The payer may have no US reporting obligation to you, but will report to their own records that payments were made to a foreign person
When might you still get a 1099?
- You didn't provide a valid W-8 form, so the payer treated you as a US person
- The payer made an error in their reporting
- You have both US and foreign activities that got mixed up
If you receive a 1099 in error: Contact the payer to explain that you're a foreign person and provided a W-8. They may need to correct their records or issue a corrected form.
7. Backup Withholding Explained
What is backup withholding?
Backup withholding is a 24% tax that US payers must withhold from payments when they cannot verify the payee's tax status. This happens when:
- You don't provide a valid W-9 (for US persons) or W-8 (for foreign persons)
- The TIN you provided doesn't match IRS records
- The IRS notifies the payer that you underreported income
How to avoid backup withholding
- US persons: Provide a complete, accurate W-9 with correct TIN
- Foreign persons: Provide the appropriate W-8 form (W-8BEN for individuals, W-8BEN-E for entities)
Can you recover backup withholding?
Yes. If backup withholding was applied incorrectly, you may be able to recover it by filing a US tax return and claiming the withheld amount as a credit against your tax liability (or requesting a refund if you have no US tax liability).
8. Frequently Asked Questions
My US client says they need to send me a 1099. I'm in Turkey. What do I do?
Explain that you're a foreign person and provide a W-8BEN (or W-8BEN-E if you're operating through a non-US entity). With a valid W-8, they typically won't need to send you a 1099.
I received a 1099-K from Stripe but I'm not a US person. Why?
This may happen if you didn't provide a W-8 to Stripe, or if there was an error in your account setup. Contact Stripe support to verify your tax status and ensure your W-8 is on file.
Do I need to file a US tax return if I receive a 1099?
Not necessarily. Receiving a 1099 doesn't automatically create a US tax filing obligation. Your filing requirement depends on factors like income type, amount, and your tax status. Consult a tax professional.
The 1099 amount doesn't match what I was actually paid. What happened?
For 1099-K especially, the form shows gross payments before fees, refunds, or chargebacks. The gross amount will be higher than your net receipts. Keep your own records to reconcile.
What if my payer refuses to accept my W-8 form?
Some payers may not be familiar with W-8 forms. You can direct them to IRS resources explaining the form. If they still refuse and apply backup withholding, you may need to file a US return to claim a refund.
9. Sources & Official Links
Non-employee compensation reporting
Payment card and third-party network transactions
Foreign person's US source income
When and how backup withholding applies
Related Resources
Cite This Entry
EchoLegal, “1099 Forms & US Tax Documents,” EchoLegal Legal Encyclopedia, v1.0 (last updated Feb 17, 2026), https://echo-legal.com/en/1099-vergi-belgeleri.
1099 Forms & US Tax Documents, EchoLegal Legal Encyclopedia (last updated Feb 17, 2026), https://echo-legal.com/en/1099-vergi-belgeleri.
ecl-gde-00013This content is for informational purposes only and does not constitute tax or legal advice. Tax laws are complex and change frequently. The information provided may not reflect current IRS guidance. Always consult a qualified CPA or tax attorney for advice specific to your situation. EchoLegal is not a law firm, accounting firm, or tax advisory service.