You have to file a 1099 if you received self-employment income and owe federal income tax

Whether you must file depends on how much you earned and what type of income it was. The IRS requires you to file a tax return if your net self-employment income — the money you kept after business expenses — reaches a certain threshold. For 2024, that threshold is $400 or more in net earnings from self-employment. If you earned less than that, you generally do not have to file.

A 1099 form itself is not what triggers the filing requirement. The 1099 is a record that someone paid you; the IRS uses it to cross-check your tax return. The filing requirement comes from how much you actually earned and whether you owe tax on it. You might receive a 1099 and still not be required to file if your total income falls below the threshold.

The rules differ slightly depending on whether you are a U.S. citizen, a resident alien, or a nonresident alien, and whether you have other income sources like wages or investments. The safest approach is to calculate your net self-employment income and compare it to the current year's threshold, then file if you meet it.

Key Takeaways

  • You must file a federal tax return if your net self-employment income is $400 or more in a single tax year.
  • Receiving a 1099 does not automatically mean you must file — the threshold is based on what you earned, not on whether you received the form.
  • Net self-employment income means your business revenue minus your business expenses, not your gross revenue.
  • If you earned less than $400 in net self-employment income and have no other tax filing requirement, you can choose not to file, though filing may result in a refund.
  • State and local tax rules may require you to file even if federal rules do not, so check your state's requirements separately.

How the $400 threshold works

The $400 rule applies specifically to net self-employment income — what remains after you subtract your business expenses from what you were paid. If you earned $600 as a freelancer but spent $250 on supplies and equipment, your net income is $350, which falls below the $400 threshold. In that case, you would not be required to file a federal return based on self-employment income alone.

This threshold has remained the same for many years and applies to anyone with self-employment income, whether you are a sole proprietor, a partner in a partnership, or a member of an LLC taxed as a sole proprietorship. The IRS does not adjust it annually for inflation.

If you have other income — wages from a job, investment income, or retirement distributions — you may be required to file even if your self-employment income is below $400. The filing requirement then depends on your total income and your filing status. A tax professional or the IRS website can help you determine whether your combined income triggers a filing requirement.

What counts as self-employment income on a 1099

Self-employment income is money you earned from work you did for yourself, not as an employee of a company. This includes freelance work, consulting, contract labor, and income from a business you own. A 1099-NEC (nonemployee compensation) or 1099-MISC (miscellaneous income) reports this kind of payment.

Not all 1099 forms report self-employment income. A 1099-INT reports interest from a bank account or loan; a 1099-DIV reports dividends from investments; a 1099-B reports stock sales. These are investment income, not self-employment income, and they follow different filing rules. You can receive multiple 1099 forms in a single year, each reporting a different type of income.

If you received a 1099-NEC or 1099-MISC, you likely have self-employment income. Add up all the 1099-NEC and 1099-MISC forms you received, subtract your business expenses, and compare the result to $400. If it is $400 or more, you must file. If it is less than $400 and you have no other income that triggers a filing requirement, you do not have to file federally, though you may choose to if you expect a refund.

When you must file even if you earned less than $400

Several situations require you to file a return regardless of the $400 threshold. If you had any wages withheld from a paycheck — meaning you worked as an employee somewhere — you must file to get that money back, even if your total income is very low. The same applies if you had federal income tax withheld from any source.

If you are married and filing jointly, your combined income (wages plus self-employment income plus other income) determines whether you must file. The threshold for married filing jointly is higher than for single filers, but you still must file if you exceed it. If you are married filing separately, the rules are stricter.

Self-employed people who owe self-employment tax — Social Security and Medicare tax — must file even if they owe no federal income tax. This is less common for very low earners but can explore if your net self-employment income is between $400 and the income tax filing threshold. Additionally, if you received certain government benefits or tax credits, you may need to file to report that information or to claim the credit.

State and local filing requirements

Federal rules and state rules are separate. You might not be required to file a federal return but still be required to file a state return. Most states that have an income tax set their own thresholds, which are often lower than the federal $400 threshold. Some states require you to file if you had any self-employment income at all, regardless of amount.

A few states have no income tax at all — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming — so you would have no state filing requirement in those places. Other states tax only certain types of income, like investment income, and may not tax self-employment income the same way the federal government does.

Check your state's tax agency website or speak with a tax professional to learn your state's rules. Filing state and federal returns together is usually simpler than filing one without the other, even if only one is technically required.

What happens if you do not file when you should

If you owe tax and do not file, the IRS can assess a failure-to-file penalty. The penalty is usually 5 percent of the unpaid tax for each month the return is late, up to 25 percent. If you owe self-employment tax and do not pay it, you also owe interest on the unpaid amount, calculated daily from the due date.

If you do not owe tax — because your income was below the threshold or because your deductions eliminated your tax liability — there is no penalty for not filing. However, if you had tax withheld from wages or made estimated tax payments, you would miss out on a refund by not filing. The IRS generally allows you to claim a refund for up to three years after the original due date.

If you received a 1099 and did not file, the IRS may eventually contact you. The agency receives copies of all 1099 forms and matches them against filed returns. If a 1099 shows income that does not appear on a return, the IRS may send a notice asking you to file or explaining that you owe additional tax. Responding promptly and filing the return, even late, is better than ignoring the notice.

Filing even when you are not required to

You can choose to file a return even if you earned less than $400 in net self-employment income. Many people do this to claim a refund of withheld taxes or to claim tax credits like the Earned Income Tax Credit (EITC). If you had any federal income tax withheld from other income sources, filing is usually worth doing.

Filing voluntarily also creates an official record with the IRS that you reported your income. This can be useful if you are explore for a loan, a mortgage, or government benefits that require tax returns as proof of income. A filed return is stronger documentation than a 1099 form alone.

If you decide to file, you can do so using tax software, a tax professional, or the IRS Free File program if your income is below a certain level. The process is the same whether you are required to file or choosing to file voluntarily.

Frequently Asked Questions

Do I have to file if I received a 1099 but earned less than $400?

No, you do not have to file a federal return if your net self-employment income is less than $400 and you have no other income that triggers a filing requirement. However, if you had any federal tax withheld from other income, filing may result in a refund worth claiming.

What if I received multiple 1099 forms from different people?

Add up the income from all your 1099-NEC and 1099-MISC forms, subtract your business expenses, and compare the total to $400. If your combined net self-employment income is $400 or more, you must file. If it is less, you do not have to file federally unless you have other income that requires it.

Does the $400 threshold include money I spent on business expenses?

No. The threshold applies to net income — what you earned minus what you spent on the business. If you earned $600 but spent $300 on supplies, your net income is $300, which is below the $400 threshold. Keep records of your expenses to calculate your net income accurately.

What if I live in a state with no income tax?

You still must file a federal return if your net self-employment income is $400 or more. State income tax rules are separate from federal rules. Living in a state with no income tax does not change your federal filing requirement.

Can I get in trouble for not filing if I did not owe any tax?

No. If your income was below the filing threshold and you owed no tax, there is no penalty for not filing. However, if you had tax withheld from other sources, you would miss out on a refund by not filing.