What is a 1099 composite?

A 1099 composite is a document used by businesses to report various types of income earned by a single recipient. For example, if a contractor provided services to a company and also received interest income from the same company, the company would issue a 1099 composite to report both types of income on a single document. The 1099 composite is filed with the IRS and a copy is provided to the recipient for use in preparing their tax return. This form is typically used for individuals who receive multiple payments from the same company, such as contractors or freelancers. It is important for businesses to accurately report all income on the 1099 composite to avoid penalties from the IRS.