--- title: "Got a 1099-K or 1099-NEC? What an Individual Should Do | MCC" description: "A 1099-K or 1099-NEC is not a bill. See what each form means, how to report side income, which costs you can subtract and what to do if a form is wrong." url: "https://mcc-solutionsnj.com/bookkeeping/guides/got-a-1099-k-or-1099-nec-as-an-individual-what-to-do" --- Bookkeeping guide · Updated October 28, 2026 # Got a 1099-K or 1099-NEC? What an Individual Should Do A 1099 in the mail can feel alarming, especially if it is your first one. It is an information return. It tells you and the IRS that someone paid you, and it does not say how much tax you owe. What you owe depends on your income minus your costs. By [Matthew Coleman](/about), MCC Solutions Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [Trial balance explained](/bookkeeping/guides/trial-balance-explained) · [Owner contribution or loan](/bookkeeping/guides/owner-equity-and-capital-contributions) · [Closing entries and retained earnings](/bookkeeping/guides/closing-entries-and-retained-earnings) **Free tools:** [Contractor vs employee cost](/bookkeeping/contractor-vs-employee-cost-calculator) · [How many sales do I need to break even?](/bookkeeping/break-even-calculator) [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) ## What each form is A 1099-NEC reports payments for work you did as a non-employee, such as freelance or contract jobs. A 1099-K reports payments you received through a payment app or online marketplace. A 1099-MISC covers other kinds of income such as some rents and prizes. Rather not file them yourself? [1099-NEC preparation and filing](/bookkeeping/1099-nec-filing-service). You can receive one form, several, or none even though you earned money. Income is taxable whether or not a form arrives. ## Reporting the income Most people with 1099 work report it on Schedule C, along with their costs. The net profit from Schedule C is subject to income tax and also to self-employment tax, which covers Social Security and Medicare for people who work for themselves. Hobby income is treated differently from a business. If you are not sure which applies, read the IRS guidance on the difference or ask a preparer. ## Subtract only real business costs Costs that are ordinary and necessary for the work reduce your profit: supplies, software, fees charged by the platform, and business use of a car or phone. Keep receipts and a mileage log. Personal spending does not count. A payment app form can include money that was not income, such as splitting a dinner bill or a refund. Keep records that show which payments were personal so you can explain the difference. ## Estimated payments Because no tax is taken out of 1099 income, you may need to make quarterly estimated payments during the year. If you only earn a small amount on the side, extra withholding from a day job can cover it. The IRS publishes safe harbor rules for avoiding an underpayment penalty, and they change, so check the current ones. ## If the form is wrong If the amount is wrong, ask the payer for a corrected form before you file. If you cannot get one, report the correct amount and keep records that show why it differs. Do not ignore a form that looks wrong, because the IRS has its own copy and may send a notice. ## A simple example Suppose you drove for a delivery app and received a 1099-NEC for $6,000. You also paid $900 for phone service used for the work and drove miles you logged for business. The form shows the gross payment only. On Schedule C you list the $6,000 as income and subtract the real costs, so your taxable profit is lower than the form total. The invented numbers here are only to show the steps. Self-employment tax is figured on the profit, and half of it is a deduction on your return. This is why keeping receipts and a mileage log through the year pays off at filing time. ## Records that protect you Keep the forms, your bank or app statements, receipts and mileage log together by year. If the IRS asks about a number, a folder that shows the payments, the costs and the profit usually settles it quickly. A plain spreadsheet works as well as paid software. ## Putting it on your return Kestrel Tax reads several 1099 forms and sends the income to the right schedule, then figures self-employment tax. Check the totals against your own records. Keeping a simple income and expense sheet during the year makes this much easier. ## Common questions **Do I have to report income under a threshold?** Yes. Taxable income is reportable even if no form arrives or the amount is small. Forms have thresholds, but the duty to report does not. **Is a 1099-K the same as profit?** No. It shows gross payments, before costs, refunds and fees, and it may include personal items. **Can I deduct a home office?** Possibly, if you use part of your home regularly and exclusively for business. The rules are specific, so read the IRS guidance or ask a preparer. This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. Bookkeeping →](/bookkeeping/) More guides - [Which Filing Status? Single, Head of Household, Married](/bookkeeping/guides/which-filing-status-single-head-of-household-or-married) - [Standard Deduction or Itemizing: How to Decide](/bookkeeping/guides/standard-deduction-or-itemizing-how-to-decide) - [What to Include on an Invoice: A Simple Checklist](/bookkeeping/guides/what-to-include-on-an-invoice) - [How to Calculate Days Sales Outstanding (DSO)](/bookkeeping/guides/how-to-calculate-days-sales-outstanding) Free tool - [Bookkeeping health check](/bookkeeping/health-check) Related - [Kestrel Tax software](/bookkeeping/mcc-tax-1040-software) - [Do I need to send a 1099?](/bookkeeping/do-i-need-to-send-a-1099) - [Self-employed tax calculator](/bookkeeping/self-employed-tax-calculator) [All guides](/bookkeeping/guides) Reach small business owners, freelancers and bookkeepers who read this guide: [advertise here](/advertise#bookkeeping). Do it yourself ### Tax Document Organizer Walk into your tax appointment with every form, nothing missing and nothing to chase. [See what's inside ($19)](/toolkits/tax-document-organizer) [Free sample](/toolkits/tax-document-organizer#free-starter)14-day full refund Free tool: [1099 deadline calculator](/bookkeeping/1099-deadline-calculator) Course: [Small Business Bookkeeping Basics](/courses/small-business-bookkeeping-basics) ($49) covers chart of accounts, reconciliations, the monthly close, payroll and 1099 basics for owners. It is training with a certificate of completion, not a credential. ## Rather have us keep the books? Ask for a quote. [Get a Quote](/bookkeeping/#interest)[Call (908) 444-6373](tel:+19084446373)