What is the use of IRS form 1099?

The IRS 1099 form is used to report monies paid to an independent contractor for services regarding the regular course of the payor's business, explains the Internal Revenue Service. Household employees, like housekeepers, don't require a 1099.

While an employee receives a W-2 form at the end of the tax year to report his income earned to the IRS, an independent contractor or freelance worker receives a 1099 form, explains Turbo Tax. The 1099 is also used to report sales made outside of a retail store. Similar forms involve interest paid on stocks and dividends, mortgage interest and withdrawals made from a retirement account.