What is a 1099 form primarily used for?

The 1099 form is primarily used to report various types of income that are not classified as salary or wages. This includes income from self-employment, interest, dividends, rental income, and certain types of legal settlements, among others. Unlike W-2 forms, which are used specifically for reporting wages paid to employees, 1099 forms provide the IRS with information about payments made to independent contractors or other non-employee sources.

For instance, if a freelancer earns income from various clients, each client would typically issue a 1099 form to report the total amount paid to the freelancer during the tax year. This ensures that all income is accurately reported to the IRS for tax purposes. Thus, option B captures the comprehensive nature of the 1099 form's purpose in the tax reporting system.