What is
Form 1099-MISC?

Updated July 3, 2020

Form 1099-MISC is one of the most used IRS 1099 forms. Learn what it is and why it is 1099-MISC used.

From 1099-MISC

The Form 10099-MISC is an information return document for those payments made to independent contractors and other non-employees in a calendar year. Form 1099-MISC is used when payments are made in the course of business only. Personal payments are not reported. Nonprofit organizations, qualified pension trusts, or profit-sharing plans of employers are considered to be engaged in business and are required to file this form. The IRS requires a business that makes certain types of payments to report on a 1099-MISC. The form is filed for everyone who has been paid for the following reasons:

  • $10 or more in broker payments or royalties that are in lieu of dividends for tax-exempt interest.
  • $600 or more in rents, awards, prizes, services, and other income payments, medical and health care payment, crop insurance proceeds, etc.
  • Payments to an attorney.
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    There is more. The Form 1099-MISC must be used to report income received from:

  • Any individual from whom the employer, under backup withholding rules, withheld federal income tax.
  • Direct sales of at least $5000 of those consumer products designated for resale any place besides a permanent retail business.
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    However, not all payments made by businesses have to be reported on a 1099-MISC. There are some exceptions. Payments that are not reported on a Form 1099-MISC include

  • Generally, payments to corporations (unless it is considered a "reportable payment" or it is an attorney, who must receive a Form 1099-MISC, regardless of corporation status).
  • Salaries paid to an employee (reported on W-2s).
  • Payments to tax-exempt organizations in the United States, the District of Columbia, a U.S. possession, or a foreign government.
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    What to report on 1099-MISC?

    Here is a summary of what is reported on Form 1099-MISC:

    What To Report Amounts To Report
    Rent or royalty payments; prizes and awards that are not for services, such as winnings on TV or radio shows (including payments reported pursuant to an election described in Regulations section 1.1471-4(d)(5) (i)(A) or reported as described in Regulations section 1.1471-4(d)(2)(iii) (A)). $600 or more, except $10 or more for royalties
    Payments to crew members by owners or operators of fishing boats including payments of proceeds from sale of catch. All amounts
    Section 409A income from nonqualified deferred compensation plans (NQDCs). All amounts
    Payments to a physician, physicians' corporation, or other supplier of health and medical services. Issued mainly by medical assistance programs or health and accident insurance plans. $600 or more
    Fish purchases paid in cash for resale. All amounts
    Crop insurance proceeds. $600 or more
    Substitute dividends and tax-exempt interest payments reportable by brokers $10 or more
    Gross proceeds paid to attorneys. $600 or more
    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 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) reported pursuant to an election described in Regulations section 1.1471-4(d)(5)(i)(A). All amounts (including $0)
    Direct sales of consumer goods for resale $5,000 or more

    For more information, please read the instructions for Form 1099-MISC.

    Important Note:

    With the introduction of Form 1099-NEC, there have been some changes to Form 1099-MISC, and now the non-employees compensations are not reported on Form 1099-MISC. With these changes 2020 onwards the Form 1099-MISC box information has been changed as listed below:

  • Payer made direct sales of $5,000 or more (checkbox) in box 7.
  • Crop insurance proceeds are reported in box 9.
  • Gross proceeds to an attorney are reported in box 10.
  • Section 409A deferrals are reported in box 12.
  • Nonqualified deferred compensation income is reported in box 14.
  • Boxes 15, 16, and 17 report state taxes withheld, state identification number, and amount of income earned in the state, respectively.
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    Form 1099-MISC due date:

    A business must file the 1099-MISC form with the IRS on paper or preferably electronically and must provide a statement to the contractor or individual receiving the payment. You are required to furnish the payee statement to recipients by January 31 (February 1 for 2021) and file with the IRS by February 28 (March 1 for 2021) if filing on paper or March 31 if filing electronically.

    Filing Type Due Date
    Recipient copy - non Box 8 or 10 February 1, 2021
    Recipient copy - Box 8 or 10 February 16, 2021
    IRS Paper Filing March 1, 2021
    IRS eFile March 31, 2021

    Check out 1099 deadlines for more information.

    Form 1099-MISC penalties:

    There are penalties associated with late filing for failure to file 1099-MISC. In addition to late filing penalties, there are other penalties, including failure to furnish correct payee statements, failure to file electronically, or fraudulent filing of 1099-MISC forms. Please find out more about penalties for non or late filing of 1099-MISC forms.

    These 1099-MISC penalties increase over time, so it is essential to file the forms as soon as possible if you miss the filing deadline. Please check out how to avoid 1099 filing penalties.

    What to do if you cannot file 1099-MISC before the due date?

    If you cannot file your 1099 forms by the due date, it is possible to get an extension to file 1099 forms. There are two types of extensions possible for 1099-MISC - extension for filing 1099 forms with the IRS, extension for providing recipient copies of 1099-MISC. Please find out Is it possible to get an extension to file 1099-MISC.

    What if you made an error in filing 1099-MISC?

    When you file a 1099-MISC, many things can go wrong. For example, you filed a wrong amount, used the wrong box, wrong payee or payer information, reported duplicate payments, or filed a 1099-MISC form by mistake. If you made anyone of the errors while filing your form, it is possible to file a correction form to fix them. Find out How to correct 1099-MISC errors.

    What are the State filing requirements for 1099-MISC?

    Please check with your state as your state may have a filing requirement that you must follow. Employers may have to file with an individual state, and it is a smart idea to check that state’s tax law to find out if they must submit an equivalent form. Most of the states participate in what is called a Combined Federal State Filing (CF/SF) program, where the IRS sends the 1099-MISC information to participating states, and you are not required to file directly with your state. Find out more about Combined Federal and State Filing.

    Form 1099-MISC requires a team effort to be appropriately administered. Human resources must work with the corporate accounting and payroll departments to identify those needing to receive the form. If an employer has any concerns about how to calculate the reported payment or issue a Form 1099-MISC, he or she needs to consult accountants.

    Using a 1099-MISC service provider like eFile360 to file you 1099-MISC is recommended, as it can save you a lot of time and headaches.