What is Form 1099-MISC?
Form 1099-MISC, Miscellaneous Information, is an Internal Revenue Service (IRS) form used to report miscellaneous income from individuals and entities that have been paid $10 or more in royalties, or $600 or more in other types of miscellaneous income during a tax year.
You may use Form 1099-MISC to report income from the following:
- Guest Speakers or Lectures
- Legal Services
- Medical or Dental Services
- Research Subjects (Travel or mileage expenses are not reportable)
- Other Related Services
Form 1099-MISC is no longer used to report self-employment taxes or non-employee income. Non-employee professionals include self-employed individuals, independent contractors, and freelancers. Non-employee compensation is now reported using Form 1099-NEC, Nonemployee Compensation.
How to fill out Form 1099-MISC?
Form 1099-MISC requires your personal information.
Enter your full legal name.
Enter your full address, including city or town, state or province, country, and ZIP or postal code.
Enter your active telephone number.
Enter your Tax Identification Number (TIN).
Enter the recipient’s TIN.
Enter the full legal name of the recipient.
Recipient’s street address
Enter the street address and apartment number of the recipient.
FATCA filing requirement box
Check the Foreign Account Tax Compliance Act (FATCA) box if you are a U.S. citizen reporting
on Form 1099-MISC to comply with the account reporting requirement under Chapter 4 of the Internal Revenue Code.
You can also check the box if you are a Foreign Financial Institution (FFI) reporting payments to
a U.S. account pursuant to an election.
Recipient’s account number
The recipient’s account number should be filled out if you check the FATCA filing requirement
box, and if your recipient has multiple accounts.
2nd TIN not.
Enter “X” if the IRS informed you twice within three tax years that the payee provided
an incorrect TIN.
Box 1 – Rents
Enter the amount paid for rents from real estate such as significant services to the tenant, sold real estate as a business, or rented personal property as a business.
Box 2 – Royalties
Enter the amount paid for royalties from oil, gas, or mineral properties; copyrights; and patents.
Box 3 – Other Income
Enter the amount paid for other income such as the beneficiary of a deceased employee, prizes, awards, taxable damages, Indian gaming profits, or other taxable income.
Box 4 – Federal income tax withheld
Enter backup withholding or withholding on Indian gaming profits.
As a payer, you should backup withhold if the recipient did not furnish his or her TIN.
Box 5 – Fishing boat proceeds
Enter the amount paid for a fishing boat crew member who is considered self-employed.
Box 6 – Medical and health care payments
Enter the amount paid for medical and health care payments.
Box 7 – Payer made direct sales totaling $5,000 or more of consumer products to the recipient for resale
Check the box if you paid for consumer products totaling $5,000 or more for resale, on a buy-sell, a deposit-commission, or another basis.
Box 8 – Substitute payments in lieu of dividends or interest
Enter the amount paid for substitute payments instead of dividends or tax-exempt interest.
Box 9 – Crop insurance proceeds
Enter the amount paid for crop insurance proceeds.
Box 10 – Gross proceeds paid to an attorney
Enter the gross amount paid for an attorney in connection with legal services.
Box 11 – Fish purchased for resale
Enter the amount paid for the purchase of fish for resale from any person involved in the transaction of catching fish.
Box 12 – Section 409A deferrals
Enter the amount paid for current year deferrals as a non-employee under a Non-qualified Deferred Compensation (NQDC) plan subject to section 490A, United States Internal Revenue Code, requirements; and other earnings on current or prior-year deferrals.
Box 13 – Excess golden parachute payments
Enter the amount paid for total compensation of excess golden parachute payments subject to a 20% excise tax.
Box 14 – Nonqualified deferred compensation
Enter the amount of income as a non-employee under an NQDC plan that does not meet the section 490A requirements.
Any taxable amount that is included in Box 12 is also included in this box.
Boxes 15 – 17
State tax withheld reporting boxes. You can use these boxes to report payments up to two
states. In box 15, enter the amount of state income tax you withheld; in box 16, enter the state or payer’s state number; in box 17, enter the amount of state income.
How to file Form 1099-MISC?
Form 1099-MISC contains several copies that the payer needs to submit to the appropriate recipients.
- Copy A — The payer submits Copy A of Form 1099-MISC to the Internal Service Revenue.
- Copy B — The payer gives Copy B of Form 1099-MISC to the recipient.
- Copy C — The payer keeps Copy C of Form 1099-MISC.
- Copy 1 — The payer submits Copy 1 of Form 1099-MISC to the State Tax Department.
- Copy 2 — The payer gives Copy 2 of Form 1099-MISC to the recipient for the recipient to file with his or her state income tax return, when required.
If you want to file electronically, download suitable software and generate a file according to the specifications in Pub. 1220. Please note that the IRS does not provide a fillable form option for Copy A.
Complete this form by using the 2021 General Instructions for Certain Information Returns, and the 2021 Instructions for Forms 1099-MISC and 1099-NEC, Nonemployee Compensation. These instructions, and other forms, can be accessed through the official website of the IRS.
Why did I receive Form 1099-MISC?
Recipients of Form 1099-MISC are individuals to whom miscellaneous income has been paid during the tax year. You can utilize the 1099-MISC form that you received to determine and categorize the kind of income you received this year. The amount of non-employee income you have received that is stated in this form should be reported in your tax return.
- If you have other concerns about reporting on Form 1099-MISC, call the information reporting customer service site toll-free at 866-455-7438. If you have a hearing or speech disability with access to TTY/TDD equipment, you can call 304-579-4827 (not toll-free).
- For future developments and the latest information regarding Form 1099-MISC and its instructions, such as legislation enacted after they were published, go to the official website of the IRS.
Frequently Asked Questions About Form 1099-MISC
Who must file Form 1099-MISC?
Whenever you pay $600 or more for services performed for your trade or business during the calendar year, you must file Form 1099-MISC, Miscellaneous Income, with the Internal Revenue Service (IRS).
Specifically, the IRS requires you to file Form 1099-MISC if you make the following payments:
- A minimum of $10 in royalties or broker payments in place of dividends or tax-exempt interest
- A minimum of $600 in:
- Prizes and awards
- Other income payments
- Medical and health care payments
- Crop insurance proceeds
- Cash payments for fish or other aquatic life you purchase and any fishing boat proceeds
- Cash paid from a notional principal contract to an individual, partnership, or estate
- Payments to an attorney
- A minimum of $5,000 of direct sales of consumer products for resale anywhere other than a permanent retail establishment
File Copy A of Form 1099-MISC to the Internal Revenue Service and Copy B to the payee.
What are the common mistakes in filing Form 1099-MISC?
The following are some common mistakes to avoid when filing Form 1099-MISC:
- Using the Wrong Form — Taxpayers reporting self-employment taxes or non-employee income must file Form 1099-NEC, Nonemployee Compensation, not Form 1099-MISC. Form 1099-NEC has replaced Form 1099-MISC as the primary form to report non-employee compensation.
- Missing or Incorrect Taxpayer Identification Number (TIN) — If you file Form 1099-MISC with missing or incorrect Taxpayer Identification Number (TIN) with the Internal Revenue Service, backup withholding or penalties may apply. You may need to issue Form W-9, Request for Taxpayer Identification Number and Certification, to the payee to resolve this error. Employers who start filing Form 1099-MISC must include the recipient's correct TIN. Form W-9 provides a place to collect this information. Form W-9 is used to request and confirm taxpayer identification and certification of non-foreign status.
- Typographical Errors — The Internal Revenue Service (IRS) encourages filers to avoid any typographical errors or mistakes, including incorrect spelling, using ink color other than black, or wrong dollar amount. Although minor errors can be corrected, you must complete Form 1099-MISC in the correct format and check for any errors before filing. Any omission or error in Form 1099-MISC may result in delays or rejections. Moreover, if you knowingly forge or provide incorrect information on your Form 1099-MISC, you may be penalized by the IRS.
- Printing Unscannable Form 1099-MISC — Copy A of Form 1099-MISC is printed in special red-ink for electronic scanning and identification. You may not print nor file Form 1099-MISC that is unsupported or unscannable. Otherwise, you may be penalized by the Internal Revenue Service (IRS). You may go to the IRS official website to order Form 1099-MISC. However, you may file and print online Copy B of Form 1099-MISC as a statement recipient.
- Failure to Provide Transmittal Form — If you are required to file a paper Form 1099-MISC, you need to file Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with it. Form 1096 is a transmittal form required by the Internal Revenue Service when filing paper forms. Without it, Form 1099-MISC is incomplete and may be rejected. If you file 250 or more Form 1099-MISC, you do not need to file Form 1096 as you must file electronically.
- Not Sending Form 1099-MISC to the Recipient — The Internal Revenue Service always encourages accurate reporting of income received for your business. If you are required to file Form 1099-MISC with the IRS, you must furnish Copy B of Form 1099-MISC to the recipient by January 31st of the following year.
What is backup withholding?
Backup withholding is a method used by the Internal Revenue Service (IRS) to collect income tax from payers due to incorrect filing of or incomplete returns.
As a payer, backup withholding reduces the risk of loss by ensuring that you always have payment to support your claim for credit, even if the payee fails to do so. The payee is subject to 24% backup withholding under the following conditions:
- Failure to provide you his or her Taxpayer Identification Number (TIN)
- The IRS notifies you that the payee provided an incorrect TIN
- The IRS notifies you to start withholding on interest or dividends due to underreporting interest or dividends on income tax returns, and the IRS mailed the payee four notices over at least 120 days but did not respond
- Failure to certify that he or she is not subject to backup withholding for underreporting of interest and dividends
What is the difference between Form 1099 and Form 1099-MISC?
Form 1099-MISC is one of the types of 1099 forms. 1099 forms are documents used to report various types of income other than salary and wage.
You receive 1099 forms if you work for an employer as an independent contractor or freelancer. If you work as an independent contractor, you are not considered an employee. Thus, you receive 1099 forms instead of Form W-2, Wage and Tax Statement.
Also, you receive Form 1099-MISC if you receive payments of at least $10 in royalties or $600 in other types of miscellaneous income during a calendar year.
Remember that not all 1099 forms are the same. They differ depending on their purpose, and filing them depends on the type of your income.
How do I avoid paying taxes on Form 1099-MISC?
Withholding is the common way to avoid tax liability. You may need to request that your payer withhold additional taxes from your Form 1099-MISC income. Thus, the payer will send Form 1099-MISC with an additional amount of taxes withheld.
If you feel that withholding is not enough, you may request to pay your tax liability on Form 1040-ES, Estimated Tax for Individuals.
Form 1040-ES is a form used by the Internal Revenue Service (IRS) for income tax payment. Use it to pay tax on income that is not subject to withholding or additional taxes owed.
When will Form 1099-MISC be mailed to recipients?
Form 1099-MISC is mailed to payees by January 31 of the year after the income was earned. However, if January 31 is a Sunday or legal holiday, Form 1099-MISC will be sent on the last business day before January 31.
How does Form 1099-MISC affect my tax?
If you receive Form 1099-MISC, it is your responsibility to pay taxes on the income reported. The Internal Revenue Service may tax you as self-employed if you make more than $400 as a contractor or freelancer.
The tax rate for self-employment is 15.3% on the first $118,500 of net income and 2.9% on any additional amount. Form 1099-MISC is one of the 1099 forms used to determine whether you are eligible for self-employment status or not.
Does receiving Form 1099-MISC mean I owe money?
No, Form 1099-MISC only reports your income and does not mean you owe money or tax.
The Internal Revenue Service may tax you as self-employed if you make more than $400 as a contractor or freelancer.
Will the IRS catch a missing Form 1099-MISC?
Yes, the Internal Revenue Service will know if you did not file Form 1099-MISC as required. You will be penalized for underreporting your income.
Can an individual issue Form 1099-MISC?
Yes, any individuals in a trade or business who paid others at least $10 in royalties or $600 in other types of miscellaneous income during a calendar year can file Form 1099-MISC with the Internal Revenue Service or the payee.
Do I have to give my handyman Form 1099-MISC?
No, you do not have to file Form 1099-MISC for any personal services or household work. However, you must file Form 1099-MISC if you are a real estate broker and employ a handyman to work in your rental properties.
You also do not have to file Form 1099-MISC for payments not made in a trade or business.
Can I file Form 1099-MISC electronically?
Yes, you can file Form 1099-MISC electronically using the Filing Information Returns Electronically (FIRE) system of the Internal Revenue Service. The FIRE system of the IRS is a secure website that streamlines the electronic filing of 1099 forms and other returns.
You can access the FIRE system if you have a Transmitter Control Code (TCC). To get a TCC, you must file Form 4419, Application for Filing Information Returns Electronically (FIRE), with the Internal Revenue Service. If your Form 4419 is approved, you will be assigned a TCC and use it as authorization to file electronically using the FIRE system.
Note that you do not need a transmitter or Form 1096 to file an electronic Form 1099-MISC and other returns.
When is the deadline to file Form 1099-MISC if I want to file electronically?
If you file electronically, you must submit Form 1099-MISC to the Internal Revenue Service by March 31.
Copy B of Form 1099-MISC must be submitted to the payee by January 31. If you are reporting payments in box 8 or 9 on your Form 1099-MISC, the deadline is extended until February 15.
When are Form 1096 and Form 1099-MISC due?
If you file Form 1096 with Form 1099-MISC with the Internal Revenue Service, it means you are filing paper forms. The due date for filing such forms is March 1.
Who is exempt from filing Form 1099-MISC?
Employers and other businesses who do not pay certain miscellaneous income to contractors are exempted from filing Form 1099-MISC.
According to the Internal Revenue Service, you do not have to file Form 1099-MISC for the following:
- Payments to a corporation, including a limited liability company (LLC), that is treated as a C or S corporation
- Payments for merchandise, telegrams, telephone, freight, storage, and similar items
- Payments of rent to real estate agents or property managers
- Wages paid to employees or payments reported on Form W-2
- Military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services
- Business travel allowances paid to employees
- Cost of current life insurance protection
- Payments to a tax-exempt organization including tax-exempt trusts, the United States, a state, the District of Columbia, a U.S. possession, or a foreign government
- Payments made to or for homeowners from the HFA Hardest Hit Fund or similar state program
- Compensation for injuries or sickness by the Department of Justice as a public safety officer disability or survivor's benefit, or under a state program that provides benefits for surviving dependents of a public safety officer who has died as the direct and proximate result of a personal injury sustained in the line of duty
- Compensation for wrongful incarceration for any criminal offense for which there was a conviction under federal or state law
Anyone, including employees who receive Form W-2, may not receive Form 1099-MISC from their employers.
Can I file multiple Form 1099-MISC?
Yes, you can file Form 1099-MISC for multiple payees.
You can also file multiple Form 1099-MISC for the same payee. For example, if you pay the same person $10,000 as both a consultant and as an independent contractor, you can file Form 1099-MISC twice.
Can I file Form 1099-MISC for employee business expense reimbursements?
No, the Internal Revenue Service requires you to file Form W-2 to report your employee business expense reimbursements. Do not use Form 1099-MISC for this purpose.
Do I need to attach Form 1099-MISC to Form W-2?
No, do not attach Form 1099-MISC to Form W-2. If you receive both of them from your employer, it means you work for him or her as an employee and a freelancer at the same time.
Can I file a late Form 1099-MISC?
Yes, you can file a late Form 1099-MISC. However, there are penalties for filing Form 1099-MISC late.
Here are the lists of penalties you will be charged depending on how late your Form 1099-MISC is:
- $50 — You will be charged $50 per Form 1099-MISC if you file within 30 days of the due date with a maximum penalty of $197,500.
- $110 — You will be charged $110 per Form 1099-MISC if you file more than 30 days after the due date but by August 1 with the maximum penalty of $565,000.
- $280 — You will be charged $280 per Form 1099-MISC if you file after August 1 with a maximum penalty of $1,130,500.
What does the IRS consider as an independent contractor?
As an independent contractor, there are two conditions you must meet to be considered as one by the Internal Revenue Service:
- You must be free from the control of the agency that has contracted with you and performing services at your own worksite or principal place of business.
- Your job skills and initiative set up the contract with your customers rather than working via a labor market.
If you meet the two conditions, then you can file Form 1099-MISC as an independent contractor.
The Internal Revenue Service considers the following workers as independent contractors:
- Auctions salespeople who sell their own property or other parties' property
- Real estate agents
- Subscription salespeople who work on commissions
- Direct sellers of consumer products and some direct mail companies and fundraisers
- Independent insurance agents and brokers
- Radio and television home shopping hosts and announcers on a third party's payroll
Will I get Form 1099-MISC from selling my house?
No. Form 1099-MISC is not used to report real estate transactions.
If you sell your house, your real estate or closing agent must issue you and the Internal Revenue Service Form 1099-S, Proceeds from Real Estate Transactions. It is a form used to report real estate transactions with non-dealers or an installment sale for anyone that is not a dealer.
Is miscellaneous income taxable?
Generally, most sorts of income are taxable. However, some kinds of income are not taxable even if you receive Form 1099-MISC for that income.
Some untaxable income includes:
- contest winnings;
- child support payments; and
- disability benefits, unless you are self-employed.
Do I have to report income if I didn't receive Form 1099-MISC?
Yes. You must report all your income even if you did not receive Form 1099-MISC.
You are required to report your income to the Internal Revenue Service (IRS) regardless of the amount of your income. If you fail to do so, the IRS will find out about it as all employers are required by law to submit Form W-2.
Additionally, if you did not receive Form 1099-MISC, it means that the agent who made certain payments to you does not consider you as an independent contractor, rather an employee.
What if I receive Form 1099-MISC with incorrect information?
If Form 1099-MISC has incorrect information, such as wrong income amount or Taxpayer Identification Number, you must let the agent who issued Form 1099-MISC fix it. Form 1099-MISC must not be filed with the Internal Revenue Service (IRS) if these errors occur. So, you have to inform the agent who issued Form 1099-MISC about the error to fix it before penalties apply.
You need to request a corrected Form 1099-MISC from your employer once he or she has fixed the error with the IRS.