Form 1099-MISC, Miscellaneous Information, is used to report various types of miscellaneous income, such as rents, prizes and awards, and other income payments.
Prior to tax year 2020, Form 1099-MISC was used to report nonemployee compensation amounts in box 7. The most recent versions of this form do not have a box for nonemployee compensation amounts, as this has been moved to its own form, Form 1099-NEC.
Who should receive a Form 1099-MISC?
Below is a breakdown of who should be issued a 1099-MISC based on the IRS guidelines. For each person in course of a business to whom they have paid the following during the year:
- At least $10 in royalties
- At least $600 in
- Prizes and awards
- Other income payments
- Cash paid from a notional principal contract to an individual, partnership, or estate
- Fishing boat proceeds
- Medical and health care payments
- Crop insurance proceeds
- Gross proceeds paid to an attorney
- Section 409A deferrals
- Nonqualified deferred compensation
As previously mentioned, Form 1099-MISC is no longer used to report nonemployee compensation amounts. If your business had independent contractors throughout the year, then you should use Form 1099-NEC, Nonemployee Compensation, to report these amounts.
Ensure you’re using the correct type of Form 1099 when completing a filing in order to avoid making corrections and having to complete this form again. If you have any confusion about which form type to complete for recipients, we recommend checking out our 1099-MISC vs 1099-NEC comparison guide.
If you’re looking for a break down of 1099-MISC vs 1099-NEC guide in a downloadable format, make sure to download our PDF guide.
Information Needed to Prepare Form 1099-MISC
Once you have determined who must receive a Form 1099-MISC, you can request their information through a Form W-9. Form W-9, like Forms W-4 for employees, will provide you with the relevant information for the recipient such as their name, address, and tax identification number. After retrieving a completed Form W-9 , you will use the information provided and the finalized amounts paid to prepare Form 1099-MISC.
Are there exceptions to filing Form 1099-MISC?
If a business falls under an S-corporation or C-corporation, the business will be exempt from filing 1099-MISC.
Are there situations in which a business is not required to file a Form 1099?
There are a couple of situations when the payer is not required to file a Form 1099 which include:
Not engaged in trade or business and
- Payment was made to an incorporated business not for medical or legal services
- Sum of all payments to an individual or unincorporated business was less than $600 for the tax year
Once the business has submitted these forms to the IRS either electronically or via mail and have received their “Accepted” status, the business filing obligation has now been satisfied.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.