1099-MISC FAQ
What is a 1099-MISC?
Form 1099-MISC is used to report:
- Rent or royalty payments
- Prizes and awards that were not for services, such as winnings on TV or radio shows
- Payments to crew members by owners or operators of fishing boats, including payments of proceeds from sale of catch
- Income from nonqualified deferred compensation plans
- Payments to a physician, physician’s corporation, or other supplier of health and medical services
- Payments for services performed for a trade or business by people not treated as its employees; examples: fees to subcontractors or directors and golden parachute payments
- Fish purchases paid in cash for resale
- Crop insurance proceeds
- Substitute dividends and tax-exempt interest payments reportable by brokers
- Gross proceeds paid to attorneys
Who needs to file a 1099-MISC?
Form 1099-MISC must be filed by any individual or entity that has:
- Paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- Paid out $600 or more in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish, or the cash paid from a notional principal contract (not common) to an individual, partnership, or estate
- Paid fishing boat proceeds
- Paid gross proceeds to an attorney
Form 1099-MISC is also used to report direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. Lastly, Form 1099-MISC must also be filed for each individual from whom federal income tax has been withheld under backup withholding rules.
What is the process for filing Form 1099-MISC?
Complete the information on Form 1099-MISC following the detailed instructions provided by the Internal Revenue Service. Create and distribute the following copies:
- Copy A – submit to the Internal Revenue Service (on paper or via electronic filing)
- Copy B and 2 – submit to the recipient for his/her federal and state (if applicable) income tax returns
- Copy 1 – submit to the state tax department, if applicable (on paper or via electronic filing)
- Copy C – retain for the payer’s records
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