An IRS tax form delivered by employers to nonemployees (e.g. consultants, independent contractors), typically in January. Form 1099-MISC reports income/compensation that nonemployees received during the prior year and is similar in concept to Form W-2 for employees.

Alert: Starting in 2020, this information is instead reported on the new IRS Form 1099-NEC.

Employers do not withhold taxes when a nonemployee exercises nonqualified stock options or when a nonemployee's restricted stock/RSU grants vest. The spread at option exercise or value at restricted stock/RSU vesting is compensation for services. Therefore self-employment tax, along with state and federal income tax, applies when the nonemployee files his or her tax return. See an FAQ on this topic.