What Is a 1099 Form—and How Does It Affect Your Expat Taxes?

Every year, countless Americans living abroad receive a 1099 form. There are several variations of this form, and each one means something different. To help you understand what yours may mean, we’re going to take a look at Form 1099.

What Is Form 1099?

IRS Form 1099 is an “information tax return.” It is used to report various types of income. The type of income you have earned will determine which version(s) of the form you receive.

For example, if you’ve received interest from money stored in a bank account or other financial institution, you may receive Form 1099-INT. If you’ve earned income as a freelancer, you may receive Form 1099-NEC.

Who Receives a 1099 Form?

Most forms of income that are not traditional employment income are reported using a 1099 form. If you’ve earned a sufficient amount of non-employment income, you will likely receive a copy of Form 1099.

The type of 1099 form you receive will tell you what form of income is being reported to you. Let’s go over the options.

Types of 1099 Forms

Form 1099-A

Form 1099-A: Acquisition or Abandonment of Secured Property is used to report the foreclosure of a property. You might receive this 1099 form if your mortgage lender foreclosed on your property, canceling some or all of your debt. This is because canceled debt is income in the eyes of the IRS, and thus taxable.

Form 1099-B

Form 1099-B: Proceeds from Broker and Barter Exchange Transactions is used to report income from the sale of certain securities, such as:

  • Stocks
  • Commodities
  • Regulated futures contracts
  • Foreign currency contracts
  • Forward contracts
  • Debt instruments
  • Options

Form 1099-B is also used to report income from bartering through an exchange, such as a bartering website. (Typically, if you barter with someone directly—outside of an exchange—you will not receive a 1099 form, though you may still be required to report any income.)

Form 1099-C

Form 1099-C: Cancellation of Debt is used to report most forms of canceled debt. As mentioned above, canceled debt is income as far as the IRS is concerned. Even if the lender merely agreed to settle for less than you originally owed, any amount that is forgiven is likely taxable.

Form 1099-CAP

Form 1099-CAP: Changes in Corporate Control and Capital Structure is used to report income received from shares in a corporation that underwent a major change in capital structure. This income may come in the form of cash, stock, or property.

Form 1099-DIV

Form 1099-DIV: Dividends and Distributions is used to report any dividends or distributions you’ve received. (This does not include dividends from a share account at a credit union. That would qualify as interest and thus appear on Form 1099-INT instead.)

Form 1099-G

Form 1099-G: Certain Government Payments is used to report income received from the state, local, or federal government. This may include:

  • Tax refunds, credits, or offsets
  • Unemployment income
  • Reemployment trade adjustment assistance (RTAA) payments
  • Taxable grants
  • Agricultural payments

You may also receive this 1099 form if you collect payments on a Commodity Credit Corporation (CCC) loan.

Form 1099-INT

Form 1099-INT: Interest Income is used to report certain types of interest income. In most cases, this means interest from a bank, brokerage account, or other financial institution.

Form 1099-K

Form 1099-K: Payment Card and Third-Party Network Transactions is used to report payments sent via credit card or a third-party payment system, such as:

  • Venmo
  • Cash App
  • PayPal

Form 1099-LTC

Form 1099-LTC: Long Term Care and Accelerated Death Benefits is used to report any type of long-term care benefits, including accelerated death benefits. These benefits may come from:

  • Insurance companies
  • Government agencies
  • Viatical settlement providers

Form 1099-MISC

Form 1099-MISC: Miscellaneous Income is used to report all forms of income that don’t fit neatly into the other 1099 form categories. Common examples include:

  • Rental income
  • Prizes and awards
  • Medical and health care payments
  • Payments to an attorney
  • Crop insurance proceeds
  • Payments from a notional principal contract

Form 1099-NEC

Form 1099-NEC: Nonemployee Compensation is used to report income earned as a freelancer, independent contractor, or other self-employed professional. Previously, this type of income was reported using Form 1099-MISC, but the IRS created Form 1099-NEC in 2020 to cover this category.

Form 1099-OID

Form 1099-OID: Original Issue Discount is used to report the buying of bonds, notes, or other financial instruments at a discount. This discount is measured against the face value of the financial instrument or its redemption value at maturity. (Typically, the instrument must have a maturity of more than one year.)

Form 1099-PATR

Form 1099-PATR: Taxable Distributions Received from Cooperatives is used to report patronage dividends or other distributions from a co-op.

Form 1099-Q

Form 1099-Q: Payments from Qualified Education Programs is used to report payments that you, your child, or your child’s school received from a 529 college savings plan. (Keep in mind that when used for qualified education purposes, 529 payments are generally not subject to tax. Thus, this 1099 form will only be for record keeping in most cases.)

Form 1099-R

Form 1099-R: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is used to report distributions from a wide variety of sources. In this case, most of the sources are listed in the title of the form.

Loans taken from your retirement plan and treated as a distribution will also probably appear on this form. The same is true for permanent and total disability payments under life insurance contracts.

Form 1099-S

Form 1099-S: Proceeds from Real Estate Transactions is used to report gains from the sale or exchange of real estate.

Form 1099-SA

Form 1099-SA: Distributions from an HSA, Archer MSA, or Medicare Advantage MSA is used to report distributions from several health-related savings accounts. (As with many other 1099 forms on this list, the payments reported are generally not taxable when used for qualified expenses.)

What Should I Do if I Receive a 1099 Form?

Receiving a 1099 form does not mean that you owe any additional taxes. Most 1099 forms are simply meant to record the non-employment income you’ve received without creating a tax liability.

However, you will typically have to report the details on your Form 1099 when filing your annual US tax return. If you’ve received a Form 1099, you can be certain that the IRS has the same information. This means that if you fail to report any income—whether or not that income is taxable—you could face penalties.

And of course, some 1099 forms will require that you pay taxes on the income received. This often includes:

  • Form 1099-NEC
  • Form 1099-DIV
  • Form 1099-C
  • Form 1099-B

…and others. If you’ve received a 1099 form, consult a qualified tax professional to learn how it may impact your expat tax return.

The good news is that even if you do owe taxes on your 1099 income, you may be able to reduce or even erase that tax debt entirely. This is because the IRS provides several tax benefits for Americans living abroad.

Let’s look at a few of the most common examples.

What Tax Deductions Are Available for US Expats?

1. Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion lets expats exclude a certain amount of foreign-earned income from US taxation. The exclusion amount changes from year to year. For tax year 2022, it’s set at $112,200.

If you qualify for the Foreign Earned Income Exclusion, you can claim it by filing IRS Form 2555.

2. Foreign Tax Credit

Using the Foreign Tax Credit, expats can deduct any income taxes they paid to a foreign government from their US tax bill—dollar for dollar. This will reduce the risk of double taxation.

If you qualify for the Foreign Tax Credit, you can claim it by filing IRS Form 1116.

3. Foreign Housing Exclusion

The Foreign Housing Exclusion allows expats to deduct housing-related expenses from their US tax bill.

This exclusion is only available if you also claim the Foreign Earned Income Exclusion. If you qualify for both, you can claim both using Form 2555.

What If I’m Behind on My Expat Taxes?

All US citizens are required to file a US tax return every year no matter where they live—from Tucson to Tokyo. However, many Americans living overseas are unaware of this obligation.

If you’re one of the myriad expats who didn’t know they had to file a US tax return, don’t panic. The IRS offers an amnesty program so expats can come into compliance without facing any penalties. It’s known as the Streamlined Filing Compliance Procedures.

To use this program, all you have to do is:

  • Self-certify that you failed to file out of ignorance rather than a willful refusal
  • File the last three delinquent income tax returns and pay any taxes you owed during that time (with interest)
  • File Foreign Bank Account Reports (FBARs) for the last six years

Once you’ve taken these steps, the IRS will consider you to be in compliance with their regulations.

Get Help from an Expat Tax Professional

We hope this guide has helped you understand what your 1099 form means and what you should do when you receive one.

Still have questions? We have answers! In fact, we can even prepare and file your expat taxes on your behalf.

At Greenback Expat Tax Services, we specialize in helping expats around the world manage their US tax obligations. Just contact us, and we’ll be happy to help you in any way we can.

Get started with your expat tax return.