If you're balancing a 9-5 while running your creative business on the side, there's a good chance you've received a 1099 for work you've been paid for. But here’s what many creatives don’t realize—when you get one, the IRS already knows you got paid because the IRS got a copy of that 1099, too. If you leave it off your tax return, they’ll notice, and that could lead to an audit.
On the flip side, if you’ve paid independent contractors or freelancers $600 or more in a year for services, you may need to file a 1099 with the IRS yourself. This is a step a lot of creatives overlook, but it’s an important part of running your business the right way.
Types of 1099s You Should Know
Not all 1099s are the same. Here are the key ones you might come across:
- 1099-NEC (Non-Employee Compensation) – If a company paid you $600 or more for freelance or contract work, this is the form you’ll receive. If you paid a freelancer or contractor $600 or more then you would be obligated to file this form with the IRS.
- 1099-MISC (Miscellaneous Income) – This one covers royalties, prizes, and even licensing income. If you license your work, music, or likeness, you might receive this instead.
- 1099-K (Payment Card & Third Party Transactions) – If you got paid through platforms like PayPal, Venmo, or Stripe and hit $600 in transactions, you’ll receive this form.
- 1099-INT (Interest Income) – If you earned interest from a bank account or investments, you’ll see it reported here.
What This Means for Your Taxes
If you receive a 1099, your Tax Liability isn’t automatically withheld like they are on your W-2 from your 9-5. That means you have to plan ahead, or you’ll get hit with a tax bill later.
A good rule of thumb: set aside 25-30% of your 1099 income for taxes at the end of the year and consider making quarterly estimated payments so you’re not stuck with owing a lump sum at tax time. We wrote a whole article on how to handle that—check it out here.
If you need accounting and tax help for yourself or your business, we’ve got you covered. Thanks to our strategic alliance with Carson Creative Solutions, led by accounting and tax pro Asia Hill, we’ve built the Tax Ready by Design™ program to help creatives stay compliant and financially sound.
Need guidance? Reach out, and let’s talk.
At my core I am a brand developer with a deep business understanding. I empower brand and business leaders to 'entrepreneur creatively' through strategic and innovative approaches to building, organizing, and operating companies.
DISCLOSURE: This communication is on behalf of By Rob Brown LLC, d/b/a By Rob Brown ("We") and it's associates. This communication is for creative purposes only, and contains general information only. We are not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. We do not assume any liability for reliance on the information provided herein. ©2024 By Rob Brown LLC, d/b/a By Rob Brown ("We"). All rights reserved.
