Who Needs to File Form 1099-MISC?

Updated December 15, 2022

Form 1099-MISC is an important form that the IRS uses to to catch underreporting by self-employed individuals. Understand who needs to file and how to file Form 1099-MISC.

A 1099-MISC form must be filed with the IRS for each person a business has paid during that year. The IRS uses Form 1099-MISC in fighting under-reporting by self-employed individuals. Hiring employers should not take filing Form 1099-MISC lightly, as there could be stiff penalties for failure to file 1099-MISC.

When From 1099-MISC needs to be filed?

Whenever a business pays an unincorporated independent contractor during the course of their business, a 1099-MISC may be needed. A 1099-MISC is not needed if payment is for non-business-related activities. The payments made for household or personal services like gardeners, babysitters, and housekeepers are not considered business-related and hence do not have to be reported on Form 1099-MISC. Here are all the payments that are reported on Form 1099-MISC:

  • Royalty payments – royalty payments of more than $10 need to be reported. Royalties from oil, gas, or other minerals, from intangible properties like patents, copyrights, trademarks, etc. are reported.
  • Rent payments of over $600 must be reported. Some examples of rent payments are real estate rentals, machine rentals, etc.
  • Prizes and Awards payment of over $600 – including merchandise won (report fair market value) and amounts paid to sweepstakes winners.
  • If a business withheld income tax from the payments it made, the withholding amount must be reported.
  • Any fishing boat proceeds of over $600 must be reported on Form 1099-MISC.
  • Medical and healthcare payments of over $600 paid to a physician or healthcare provider must be reported. You are required to report medical or healthcare payments made even to corporations. The exception for corporations does not apply for medical payments.
  • Substitute payments of at least $10 in lieu of dividends or interests.
  • Crop insurance proceeds of over $600 paid to farmers.
  • Gross proceeds of over $600 paid to an attorney must be reported.
  • Section 409A deferrals of over $600 are reported.
  • Any Excess Golden Parachutes payments (any payment over the base amount or original compensation) are reported.
  • Nonqualified deferred compensations are reported.

    When is 1099-MISC not needed? Exceptions.

  • Rental payments made to a real estate agent or property manager do not have to be reported.
  • Amount paid to sweepstakes winners do not have to be reported on Form 1099-MISC is wager is made, instead use Form W-2G.
  • Awards paid to employees are not reported on Form 1099-MISC; instead, use Form W-2.
  • Attorney fees of over $600 paid to an attorney are not reported on Form 1099-MISC, instead, use Form 1099-NEC.
  • Nonqualified deferred compensation reported on 1099-MISC is also reportable on Form 1099-NEC.

    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. Now the non-employees compensations are not reported on Form 1099-MISC. Please check out the 1099-NEC filing requirements.