Jackson Hewitt Tax Practice Test 2026 – Your All-in-One Guide to Exam Success!

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What is Form 1099-NEC used for?

To report wages from employment.

To report nonemployee compensation (self-employment income) paid to independent contractors.

Form 1099-NEC is used to report payments for services performed by nonemployees, typically self-employed individuals or independent contractors. The IRS requires a business to issue this form if it pays at least $600 in a year for those services, so the recipient can report the income on their tax return. This form specifically captures nonemployee compensation and is the separate filing that replaced the former practice of putting such payments on Form 1099-MISC.

This form is different from wages, which are reported on a Form W-2 with payroll withholding. It also isn't used for interest income (reported on Form 1099-INT) or retirement distributions (reported on Form 1099-R).

To report interest income.

To report retirement distributions.