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IRS Form 1099-MISC

IRS Form 1099-MISC
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Updated March 20, 2024

A 1099-MISC is a tax form used to report certain payments made by a business or organization. Payments above a specified dollar threshold for rents, royalties, prizes, awards, medical and legal exchanges, and several other specific transactions must be reported to the IRS using this form. Employee and non-employee compensation are reported separately.

Table of Contents

What Is It Used For?

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.

Trade or Business vs. Personal Payments

1099-MISC is for business use only (including for-profit businesses, non-profit organizations, and government agencies). Personal payments are not reportable.[2]

Deadlines

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]

How to Fill Out

Form 1099-MISC consists of three columns with fields for general information on the left and numbered boxes on the right. The form includes multiple copies: one for the IRS, one for the recipient, one for the payer’s records, and one for the state tax department.

Payer’s Information

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

Taxpayer Identification Numbers (TIN)

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

Recipient’s Information

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

Account Number

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)

Box 1: Rents

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

Box 2: Royalties

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)

Box 3: Other Income

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.

Box 4: Federal Income Tax Withheld

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.

Box 5: Fishing Boat Proceeds

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.

Box 6: Medical and Health Care Payments

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.

Box 7: Payer Made Direct Sales

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.

Box 8: Substitute Payments in Lieu of Dividends or Interest

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.

Box 9: Crop Insurance Proceeds

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

Box 10: Gross Proceeds Paid to an Attorney

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]

Box 11: Fish Purchased for Resale

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.

Box 12: Section 409A Deferrals

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

Box 13: FATCA Filing Requirement

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

Box 14: Excess Golden Parachute Payments

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).

Box 15: Nonqualified Deferred Compensation

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.

Boxes 16-18: State Information

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).

How to File

Infographic showing filing options: Online and by mail.

If filing by mail, only submit original copies ordered from the IRS. Do not file forms you printed yourself.[7]

  1. Collect W-9s from each payment recipient
  2. Choose filing method (by mail, online, or with third-party software. If filing electronically, skip to step 6.)
  3. Complete Form 1096 and Copy A on official IRS documents
  4. Mail Form 1096 and Copy A to the appropriate IRS address
  5. File Copy 1 with state tax department (see filing portals by state)
  6. Send Copy B to recipients (printed copies suffice)
  7. Retain Copy C for your records

FAQs

What is the difference between 1099-MISC and 1099-NEC?

Through the 2019 tax year, 1099-MISC was familiar to freelancers, contractors, and self-employed individuals as the tax form used to report their pay. But in 2020, the IRS introduced the 1099-NEC to create a separate category for non-employee compensation.[9] The 1099-MISC is now reserved for transactions made by businesses that fall outside the category of compensation.

Do lawyers get 1099-MISC or 1099-NEC?

Payments for the services of an attorney must be reported on 1099-NEC. Other payments to an attorney or law firm totaling $600 or more, such as settlement funds, are reported on 1099-MISC.[10]

Why did I get a 1099-MISC?

If you received a 1099-MISC copy from a business or organization that issued you a payment, it means they are complying with the requirement to report that payment to the IRS.

Sources

  1. About Form 1099-MISC, Miscellaneous Information | IRS
  2. Instructions — Trade or Business Reporting Only | IRS
  3. Instructions — Filing Dates | IRS
  4. Backup Withholding | IRS
  5. Instructions — Payments to Attorneys | IRS
  6. Notice 2008-115
  7. Form 1099-MISC PDF
  8. Publication 1220
  9. How to Report Non-Employee Compensation | IRS
  10. CFR § 1.6045-5 | Cornell Legal Information Institute