IRS Form 1099-MISC

Form 1099-MISC is used for miscellaneous income. It no longer includes independent contractor income.

This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.

Form 1099-MISC is no longer the independent contractor tax form.

Independent contractor income used to be reported on Form 1099-MISC, but the Internal Revenue Service decided to split it off into a separate Form 1099.

Payments directly from a business to an independent contractor now go on Form 1099-NEC. NEC stands for nonemployee compensation.

If the business uses a third-party payment network to pay independent contractors, that income goes on Form 1099-K. Payment networks include services like PayPal and Stripe.

What income goes on Form 1099-MISC?

Since IRS Form 1099-MISC is for miscellaneous income, it should be no surprise that there are several different types of income reported on this tax form.

Each type of payment gets its own box on the form.

  • Box 1: Rents

  • Box 2: Royalties

  • Box 3: Other income

  • Box 5: Fishing boat proceeds

  • Box 6: Medical and health care payments

  • Box 7: Payer made direct sales totaling $5,000 or more of consumer products to recipient for resale (Payments to independent contractors used to go in this box until they were moved to Form 1099-NEC.)

  • Box 8: Substitute payments in lieu of dividends or interest

  • Box 9: Crop insurance proceeds

  • Box 10: Gross proceeds paid to an attorney

  • Box 11: Fish purchased for resale

  • Box 12: Section 409A deferrals

  • Box 14: Excess golden parachute payments

  • Box 15: Nonqualified deferred compensation

The missing boxes from the above list provide additional information on Form 1099-MISC. They include:

  • Box 4: Federal income tax withheld

  • Box 13: FATCA filing requirement

  • Box 16: State tax withheld

  • Box 17: State/Payer’s state no.

  • Box 18: State income

What is the minimum amount to receive a Form 1099-MISC?

The minimum amount to receive Form 1099-MISC depends on the payment type.

The minimum for most payments is $600. That’s total payments made and may not all be taxable income since it doesn’t account for possible deductions.

The minimum is $10 for royalty income or broker payments in lieu of dividend income or tax-exempt interest income.

When someone sells at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment, the SELLER has to issue a 1099-MISC. This is a little backward since the person paying the money usually issues the 1099 form, but the purpose is to help the IRS track the reseller since consumers don’t have to issue 1099 forms.

Your state taxing authority may have additional 1099 requirements, such as reporting lower amounts of income compared to the IRS Form 1099 rules.

Where do you report Form 1099-MISC on your tax return?

Since there are several different types of possible income on Form 1099-MISC, how to report that income will vary.

Most income will end up on Schedule 1 of Form 1040. You may have to attach additional forms and schedules.

You generally don’t need to attach your 1099 forms when you file taxes. They’re for your information, and the IRS also gets a copy to check your tax return.

If your tax software asks you to enter your 1099s, it’s usually just to make the tax filing process easier.

How much tax will you owe on 1099-MISC income?

1099-MISC income may count as business income or self-employment income. You’ll pay income tax plus self-employment tax on this income.

Other 1099-MISC income is considered other income. Other income is typically subject to income taxes but not self-employment taxes.

In some cases, you may also be eligible for more favorable investment tax rates.

When should you receive Form 1099-MISC?

In most cases, you should receive your 1099 forms by January 31st for the previous tax year. If your payer uses postal mail to send 1099 forms, they have to postmark it by January 31st.

Payers have a little extra time to file copies of Form 1099-MISC with the IRS. If you file tax forms by mail, you usually have until February 28th. If you electronically file your 1099 forms, you usually have until March 31st.

Safeguarding Your Identity

When you do business with someone who will have to issue you a Form 1099, you will have to provide your taxpayer identification number. When possible, get an Employer Identification Number (EIN) and use it instead of your Social Security Number to reduce how much you have to give out your Social Security Number.

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