Form 1099-MISC Miscellaneous Income: What It Is and Who Must FileForm 1099-MISC, Miscellaneous Income, is an information return used by payers to report various types of payments made during the tax year to non-employees. Historically one of the main forms for reporting contractor and other payments, its role has changed since 2020 (when Form 1099-NEC was reintroduced for nonemployee compensation), but 1099-MISC remains important for several payment categories. This article explains what the form covers, who must file it, when and how to file, common boxes and examples, recordkeeping tips, and potential penalties for failure to file correctly.
At a glance: key facts
- Form 1099-MISC reports miscellaneous payments other than nonemployee compensation.
- Payers must file Form 1099-MISC when they make reportable payments of $600 or more (unless a different threshold applies).
- Amounts reported on Form 1099-MISC are used by recipients to report income on their federal tax returns.
What is Form 1099-MISC?
Form 1099-MISC, Miscellaneous Income, is an IRS information return used by businesses, organizations, and individuals who make certain types of payments to report those payments both to the IRS and to the payment recipients. The purpose is to ensure income is properly reported and taxed. The form includes multiple boxes for different payment types (rents, royalties, prize awards, medical and healthcare payments, crop insurance proceeds, attorney payments, and more).
Since tax-year 2020, Form 1099-NEC (Nonemployee Compensation) was brought back to report payments to independent contractors and other nonemployee compensation at the $600 threshold. As a result, 1099-MISC is now used for a narrower set of payment types.
Who must file Form 1099-MISC?
A payer must file Form 1099-MISC for each person to whom they have paid during the year:
- At least $600 in rents (Box 1).
- At least $10 in royalties (Box 2).
- At least $600 in other income payments (Box 3).
- At least $600 in medical and health care payments (Box 6).
- At least $600 in payments to an attorney (Box 10) — special rules apply (see below).
- Any fishing boat proceeds (Box 5), crop insurance proceeds (Box 9), or substitute payments in lieu of dividends or tax-exempt interest (Box 8), regardless of amount in specific situations.
- For direct sales of consumer products for resale totaling $5,000 or more (reportable criteria vary).
Who is a payer? Any person, business, trust, partnership, or other entity making qualifying payments. Payers must obtain a correct Taxpayer Identification Number (TIN) — usually via Form W-9 from the payee — to complete the 1099-MISC.
Who is a recipient? Typically a nonemployee such as a landlord, an attorney, a vendor paid for rent or prizes, or a medical provider. Corporations generally are exempt from 1099 reporting for many payment types, but there are exceptions (for example, payments to attorneys are reportable even if the recipient is a corporation in many cases; medical and health care payments to corporations are also reportable).
Common boxes on Form 1099-MISC and what they mean
- Box 1 — Rents: Rent payments of $600+ to landlords or property owners.
- Box 2 — Royalties: Royalties of $10+ (often paid to authors, inventors, rights holders).
- Box 3 — Other income: Miscellaneous income, e.g., prizes, awards, taxable damages.
- Box 4 — Federal income tax withheld: Backup withholding amounts (if payer was required to withhold).
- Box 5 — Fishing boat proceeds: Share of proceeds to crew members.
- Box 6 — Medical and health care payments: Payments of $600+ to providers for medical services (including corporations in most cases).
- Box 7 — Payer made direct sales of $5,000 or more: Indicates direct-sales threshold met.
- Box 8 — Substitute payments in lieu of dividends or tax-exempt interest.
- Box 9 — Crop insurance proceeds.
- Box 10 — Gross proceeds paid to an attorney: Reportable for legal services or settlement payments; special reporting rules may apply for attorney fees and settlements paid to attorneys even when the attorney is incorporated.
- Box 13 — Excess golden parachute payments; Box 14 — Nonqualified deferred compensation; others appear on the form depending on year/version.
Note: Line/box numbers and categories can change slightly across tax years; always use the current-year form and instructions.
When to file and deliver
- Furnish Copy B (recipient’s copy) of Form 1099-MISC to recipients by January 31 (for boxes that include federal income tax withholding or where recipient copy deadline is Jan 31). In some years the deadline for recipient copies can vary slightly depending on which boxes are used — verify current IRS guidance.
- File Copy A (the IRS copy) electronically or by mail. If filing on paper, the general due date historically has been by the end of February; for electronic filing the deadline historically has been the end of March. However, in recent years deadlines may have changed or been aligned with January 31 for certain forms; confirm current-year IRS filing dates before filing.
Electronic filing is required if you file 250 or more information returns (threshold may be lower under updated IRS rules), though the IRS encourages electronic filing for all filers.
How to prepare Form 1099-MISC
- Collect accurate payee information (name, address, TIN). Use Form W-9 to obtain this from payees.
- Track payments during the year by category (rent, royalties, medical payments, attorney payments, etc.).
- Determine whether each payee meets the reporting threshold for any box.
- Prepare the 1099-MISC with correct amounts in the appropriate boxes. Include backup withholding in Box 4 if applicable.
- Furnish recipient copies and file with the IRS (either on paper or electronically using IRS FIRE or through an authorized e-file provider).
- Keep copies and supporting records (bank statements, invoices, W-9s) for at least three years (longer if audit or special circumstances apply).
Special rules and common scenarios
- Independent contractor payments: These are generally reported on Form 1099-NEC (not 1099-MISC) for nonemployee compensation. Do not report contractor fees in Box 7 of 1099-MISC for tax years after the reintroduction of Form 1099-NEC.
- Attorney payments: Gross proceeds paid to an attorney (Box 10) must be reported on 1099-MISC even if the attorney’s firm is a corporation. Fees paid to attorneys for legal services are typically reported on Form 1099-NEC (if to nonemployees) or 1099-MISC depending on the nature of the payment—check instructions carefully.
- Medical payments to providers (Box 6) are reportable even if the provider is incorporated. Insurance companies, third-party payers, and medical suppliers should review IRS instructions for specifics.
- Backup withholding: If a payee fails to provide a correct TIN or is subject to backup withholding for other reasons, the payer must withhold federal income tax at the backup withholding rate and report it in Box 4.
- Payments to foreign persons: Use Form 1042-S for payments to foreign persons unless a specific exception applies; do not use 1099-MISC for most foreign payees.
Examples
- Landlord rental payments: A business pays \(7,200 in annual rent to an individual landlord — the business must issue Form 1099-MISC reporting \)7,200 in Box 1.
- Royalties: An author receives \(200 in royalties — the payer reports the amount on 1099-MISC Box 2 (threshold \)10).
- Medical clinic payments: An insurer pays a doctor $2,500 in medical payments for services — reportable in Box 6 if threshold met.
- Attorney settlement: A settlement paid to an attorney of $15,000 as gross proceeds in connection with a lawsuit — reportable in Box 10.
Penalties for failure to file or furnish correct 1099-MISC
The IRS can assess penalties for failing to file correct information returns or for failing to furnish correct payee statements. Penalty amounts vary based on how late the return is filed and whether the failure is intentional. Typical penalty tiers increase the longer the delay; intentional disregard carries the highest penalty. There may also be penalties for failing to file electronically when required.
If you receive a penalty notice, respond promptly — in some cases you can request penalty relief (reasonable cause) with documentation showing why the failure occurred.
Recordkeeping and best practices
- Request a completed Form W-9 before making the first payment to a payee.
- Maintain organized payment records by category and by payee.
- Reconcile accounts payable and bank records regularly to catch missed reporting thresholds.
- Use accounting or payroll software that tracks 1099-reportable payments and can generate forms or data for filing.
- Consider electronic filing to reduce filing errors and meet IRS thresholds.
- When in doubt, consult the current-year IRS instructions for Form 1099-MISC or a tax professional.
Common mistakes to avoid
- Reporting contractor payments on 1099-MISC instead of 1099-NEC (post-2020 changes).
- Missing or incorrect TINs — obtain W-9s.
- Failing to report payments to attorneys or medical providers when required.
- Missing deadlines for furnishing recipient copies and IRS filing.
- Not applying backup withholding when required.
Final notes
Form 1099-MISC remains a key IRS information return for several payment types. Accurate recordkeeping, timely collection of TINs, correct use of 1099-MISC versus 1099-NEC, and adherence to filing deadlines will minimize penalties and ensure recipients receive correct information to report taxable income. For complex situations—such as payments involving foreign persons, unusual settlements, or ambiguous payee status—consult the IRS instructions for the current year or a tax professional.
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