If you receive $600 from a bank, brokerage or business client over the course of a year, the company in question probably has to send you a 1099, as well as mailing a copy to the IRS. The 1099 family of forms helps the government keep track of your non-wage income. Freelance income, returns on investment, canceled debt and withdrawals from an IRA can all trigger a 1099.
If you work for a company but you're not an employee, you may get a 1099-MISC in the mail. A business usually sends out a 1099-MISC if it pays you $600. If you earn royalties, $10 in payments is all that's required. Private individuals don't have to send out forms at all. Fixing the roof for a local business may get you a 1099, but fixing the roof at the business owner's house will not, no matter how much he pays you.
Banks send out a 1099-INT any time you earn more than $600 in interest. You sometimes receive the form if you earn less. For example, if cashing in a CD early loses you $10 or more of interest, a 1099 goes out. The 1099-DIV for dividend income has a low threshold: All it takes is $10 in dividends and the bank or brokerage has to send you a form. If you get more than $10 from an IRA, pension or annuity, you get a 1099-R.
The federal government considers most canceled debts a form of taxable income. If your credit-card company or other creditor forgives $600 or more in debt, the IRS wants to know. As with other 1099s, the 1099-C only applies to business: If your best friend forgives a personal loan to you, no 1099s go out. If one of your creditors gets property in payment of the debt -- repossessing your car, for instance -- you get a 1099-A stating the property's fair market value.
When you have multiple freelance clients or investment accounts, each company only tracks its own payments to you. Six businesses paying you $500, for instance, generates $3,000 in taxable income but no 1099 forms. That's why you need to keep your own records of different 1099 income and not just rely on the forms. A freelancer who only reports the income on her 1099-MISCs will end up in trouble if she has clients who paid her smaller amounts.