What is Form 1099-MISC?
Form 1099-MISC, Miscellaneous Income, is an Internal Revenue Service (IRS) form employers use to report nonemployee, business compensations paid. Nonemployee taxpayers include self-employed individuals, freelancers, sole proprietors, and independent contractors. The federal tax agency requires businesses to file Form 1099-MISC for each person to whom they have paid one or more of the following:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
- At least $600 in:
- services performed by someone who is not their employee;
- prizes and awards;
- other income payments;
- medical and health care payments;
- cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish;
- generally, the cash paid from a notional principal contract to an individual, partnership, or estate
- payments to an attorney; and
- any fishing boat proceeds.
- At least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
If you are a business or a professional who paid a nonemployee individual, meeting the above-mentioned qualifications, you must issue Form 1099-MISC to the recipient by January 31 and to the IRS by the last day in February. The form is an annual wage report form, reporting the annual income of an individual.
NOTE: In 2020, the IRS changed Form 1099-MISC and introduced the 2020 Form 1099-NEC. Be sure to use the 2019 version of 1099-MISC for 2019 payments to nonemployees. Taxpayers will not be able to receive Form 1099-NEC until January or February of 2021, as they will only use it to report nonemployment income earned during the 2020 tax year.
How to Fill Out Form 1099-MISC?
This guide applies to Form 1099-MISC before its 2020 upgrade,
Form 1099-MISC contains several copies; the purpose of each copy is different from the others.
- Copy A is to be filed with the IRS no later than January 31.
- Copy 1 is to be submitted to the state tax department of the recipient.
- Copy B is for the recipient for his or her record.
- Copy 2 is for the recipient, to be filed with his or her state income tax return when required.
- Copy C is for payers (e.g. business) to keep for their records.
Use the following guide to accurately fill out Form 1099-MISC:
PAYER’S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no.
Provide the required information about yourself.
Provide your tax ID number. You may use your EIN.
Provide the tax ID number of the person you paid.
Provide the name of the person you paid.
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
Provide the address of the person you paid.
According to the IRS, “the account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-MISC. It is also required if you check the ‘FATCA filing requirement’ box.”
FATCA filing requirement
According to the IRS, “check the box if you are a U.S. payer that is reporting on Form(s) 1099 (including reporting payments on this Form 1099-MISC) as part of satisfying your requirement to report with respect to a U.S. account for chapter 4 purposes as described in Regulations section 1.1471-4(d)(2)(iii)(A). In addition, check the box if you are a Foreign Financial Institution (FFI) reporting payments to a U.S. account pursuant to an election described in Regulations section 1.1471-4(d)(5)(i)(A). Finally, check the box if you are an FFI making the election described in Regulations section 1.1471-4(d)(5)(i)(A) and are reporting a U.S. account for chapter 4 purposes to which you made no payments during the year that are reportable on any applicable Form 1099 (or are reporting a U.S. account to which you made payments during the year that do not reach the applicable reporting threshold for any applicable Form 1099).”
2nd TIN Not.
According to the IRS, “you may enter an "X" in this box if you were notified by the IRS twice within 3 calendar years that the payee provided an incorrect TIN. If you mark this box, the IRS will not send you any further notices about this account. However, if you received both IRS notices in the same year or if you received them in different years but they both related to information returns filed for the same year, do not check the box at this time. For purposes of the two-notices-in-3-years rule, you are considered to have received one notice and you are not required to send a second "B" notice to the taxpayer on receipt of the second notice.”
For the numbered boxes, you only need to provide the total amount paid in the box that applies. Leave the inapplicable boxes blank.
Box 1 Rents
Provide the total amount paid in rents, including real estate, machine, and pasture rentals.
Box 2 Royalties
Provide the total amount paid in royalties of any kind, such as property or intellectual rights.
Box 3 Other income
Provide any payments made that do not fall under any of the other boxes.
Box 4 Federal income tax withheld
Provide the total amount of withheld federal income tax.
Box 5 FIshing boat proceeds
Provide the total amount paid to a member of a crew..
Box 6 Medical and healthcare payments
Provide the total amount paid to a health or medical professional.
Box 7 Nonemployee compensation
Provide the total amount paid to a hired nonemployee contractor.
Box 8 Substitute payments in lieu of dividends or interest
Provide “aggregate payments of at least $10 of substitute payments received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer’s securities.”
Box 9 Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale
Check the box if you sold consumer products to an individual for resale that amounted to $5,000 or more.
Box 10 Crop Insurance proceeds
Provide the insurance proceeds paid to farmers.
Boxes 11 and 12
Leave these boxes blank.
Box 13 Excess golden parachute payments
Provide total compensation of any excess golden parachute payments.
Box 14 Gross proceeds paid to an attorney
Provide the total amount paid to an attorney in connection with legal services
Boxes 15a and 15b Section 409A deferrals and income
These boxes refer to Section 409A of the Internal Revenue Code. In 15a, provide the deferred amount to be paid in a future year. In 15b, provide the income amount.
Box 16 State tax withheld
Provide any amount you withheld for the contractor’s state taxes. Use this box only if your state does not participate in the Combined Federal / State Filing Program.
Box 17 State / Payer’s state no.
Write the abbreviated name of the state and the payer’s state identification number..
Box 18 State income
Enter the amount of state payment.
You can file Form 1099-MISC by mail or online. For more than 250 information returns for a year, the IRS requires that you file electronically.