This reports nonemployee compensation, which is paid to independent contractors and vendors. Any payments of $600 or more made through ACT, EFT, direct deposit, cash, and checks of $600 will be reported here.
You can expect to receive this form if you worked as a freelancer or contractor and were paid more than $600 by a single company or individual. Examples of this include driving for DoorDash or Uber. We ask you about this form under the "Income" section > "Freelance income" section of the tax filing flow.
Breaking down the boxes:
- Box 1: The total amount a business or person paid you during the year.
- Box 4: Federal income tax withheld — Most of the time this box will be empty, as usually clients don't withhold taxes for contractors, freelancers, or self-employed people. You're responsible for setting aside money for taxes yourself.
- Box 5: Reserved for future use by the IRS. It should be blank.
- Box 6: Non-tangible personal property is reported here.
- Box 7: 'Backup withholding' — Backup withholding can occur if you haven't given the payer your correct taxpayer ID number. Most likely this box will be blank.
- Boxes 1-3 on the left side of the form: These boxes are where the payer's and your (the recipient's) names, addresses, and taxpayer ID numbers go.