If you make certain types of payments in the course of your trade or business, you must issue a 1099-MISC to the payment recipient and file it with the IRS. Common reportable payments include:^[1]

1. Royalties or broker payments ($10 or more)
2. Rents ($600 or more)
3. Prizes and awards ($600 or more)
4. Payments to a legal services provider ($600 or more)
5. Medical or health care payments ($600 or more)
6. Direct sales of consumer products for resale outside of a permanent retail establishment ($5,000 or more)

If the business issued a payment outside of employee or non-employee compensation, chances are the payment is reportable on 1099-MISC. See the instructions for more details.

Taxpayers must file one 1099-MISC for each party that received a qualifying payment during the course of the tax year. Issue a copy to each recipient by January 31.Form 1099-MISC is due to the IRS on February 28 if filed on paper, or March 31 if filed electronically.^[3]

The payer should fill out their full name or business name, street address, and telephone number on the top left corner of the form.

TINs must be provided for the payer and the recipient. It’s important to use the proper formats and hyphen placements:

• Social security numbers and other individual taxpayer identification numbers: XXX-XX-XXXX
• Employer Identification Numbers: XX-XXXXXXX

Provide the recipient’s full name or business name and street address.

The IRS encourages payers to designate an account number for every 1099-MISC they file. An account number is required if:

1. The payer has multiple accounts with one recipient and is filing more than one 1099-MISC for them
2. The FATCA Filing Requirement box is checked (see Box 13)

Enter the amount totaling $600 or more you paid in rent for:

• Commercial real estate rentals used for office space (unless paid to a real estate agent or property manager who then pays to the owner; in this case, the agent or property manager must report the payment on their own 1099-MISC)
• Machine rentals, such as construction equipment
• Pasture rentals, such as land used for grazing

Enter gross royalty payments of $10 or more from properties such as:

• Intangible assets like patents, copyrights, and trademarks
• Royalties paid by a publisher to an author or non-corporation literary agent
• Oil, gas, or other minerals (except surface royalties, which should be entered in box 1)

This box is the catch-all for payments above $600 that are required to be reported on 1099-MISC but do not have their own box. Include payments for prizes and awards here, except those that are transferred to a charitable organization or government agency. See the instructions for other special cases including deceased employees’ wages, punitive damages, and more.

Payers are sometimes required to withhold a 24% tax in case the recipient fails to report a payment on their tax returns.^[4] Enter the amount of any backup withholding here, along with any income tax withheld from payments to members of Indian tribes operating Class II or III gaming activities.

Operators of fishing vessels must report the proceeds paid to crew members if the crew has less than ten members on average. Cash payments of up to $100 paid to crew members for additional duties are also reportable if they are contingent on a minimum catch and traditional in the industry.

Report payments made to physicians, health care providers, or other suppliers of medical services, except payments to pharmacies for prescription drugs. Include incidentals such as injections and medical devices.

Mark an “X” in the checkbox if you sold consumer goods totaling $5,000 or more to a buyer for resale outside of a permanent retail establishment. Alternatively, file a 1099-NEC by January 31st reporting this information. Do not report it on both forms.

Enter broker or customer payments of $10 or more paid as a substitute for dividends or tax-exempt interest resulting from the loan of a customer’s securities.

Crop insurance proceeds totaling $600 or more paid to farmers by insurance companies must be reported here, unless the expenses have been capitalized.

Report payments in connection with legal proceedings but not directly for an attorney’s services, such as settlement funds, in Box 10. The term “attorney” here includes law firms and legal service providers.^[5]

If you are in the business of purchasing fish (or other aquatic life) from commercial fishing outfits for resale, keep records of the date and amount of all cash payments and report the total here.

The IRS has waived the requirement to report employee deferrals in this section.^[6] As such, Box 12 does not need to be completed.

If you are filing this form to comply with Foreign Account Tax Compliance Act (FATCA) requirements, check this box.

Enter the amount of excess golden parachute payments (a significant amount of money guaranteed to a shareholder, officer, or highly compensated individual in the event that they lose their position).

A non-qualified deferred compensation (NQDC) plan arranges for a portion of a person’s salary to be delayed. Provide the total amount of income deferred, including earnings on the deferred income, for any NQDC that falls under an exception from Section 409A.

This section may optionally be completed if you are a participant in the Combined Federal/State Filing Program or if you are required to file paper copies of Form 1099-MISC with a state tax department (see filing instructions).