What Is IRS Form 1099-MISC?
IRS Form 1099-MISC is an information return that reports various payments made to individuals and some businesses if those payments are not employee or non-employee compensation. MISC stands for "miscellaneous income" that doesn't have an information return of its own.
Your company must have an employer identification number (EIN) or Social Security number (SSN) in order to complete and issue a 1099-MISC form to a payee. You can apply for an EIN online based on the type of business entity you've established.
Who Uses IRS Form 1099-MISC?
IRS Form 1099-MISC is used by any company that pays an individual or external company in excess of $600 in any calendar year, or $10 in royalties, including:
- Prizes and awards
- Medical and health care payments
- Crop insurance proceeds
- Fishing boat proceeds
- Section 409A deferrals
- Nonqualified deferred compensation
- Payments made to an attorney
The 1099 Form for Independent Contractors
Form 1099-NEC was introduced in 2020. It supplements the 1099-MISC for non-employee income. You'll no longer issue Forms 1099-MISC to independent contractors or freelancers who perform work for you. You'll issue this form instead.
The introduction of this tax form speeds up the date for employers to report miscellaneous income as well. The date is January 31 as of 2020. There used to be a 30-day filing extension for any returns that reported non-employee compensation, but it was causing some taxpayers a delay.
Where to Get Form 1099-MISC
Form 1099-MISC can be downloaded from the IRS website. It also can be ordered for delivery through the U.S. Postal Service.
Form 1099-MISC will be included if you use commercial tax software to complete your tax returns.
How to Fill Out Tax Form 1099-MISC
You'll need your payees' Taxpayer Identification Numbers (TINs) if they have them, or Social Security numbers (SSNs). It's a good practice to have all entities to whom you pay money complete a W-9 form at the time you engage their services. Form W-9 is the “Request for Taxpayer Identification Number and Certification." It will provide you with the necessary information at the onset of your business relationship when it's completed.
What to Do if You Don't Receive Form 1099-MISC
Contact the company you worked with if you were paid one of these forms of income over the required thresholds, but you didn't receive a Form 1099-MISC. Ask them to reissue the document. The form doesn't have to be filed with your tax return, but it's important to total and report all sources of income on your return that have been reported to the IRS. Doing so can avoid having your return flagged for an audit.
Can Tax Form 1099-MISC Be e-Filed?
Tax Form 1099-MISC can be e-filed by the business that's the issuing agent. This, too, is part of any commercial tax preparation software.
Where to Mail Tax Form 1099-MISC
You can submit Tax Form 1099-MISC to one of three regional IRS Centers located in Austin, TX, Kansas City, MO, and Ogden, UT.
The address to which you submit your 1099-MISC form depends on where your principal business, office, or agency is located in the United States. It would be your legal residence in the case of an individual.
Filing a Form 1099-MISC Without an EIN
You're still required to complete the 1099-MISC for anyone you've paid if you're a sole proprietor and don't have an EIN. You should use your Social Security number in this case. You might find yourself in this position if you've contracted with other entities and met the filing threshold of paying $600 to any of them within the year.
Penalties for Not Filing Form 1099-MISC
Small businesses with less than $5 million in gross receipts can be fined $50 per form if late 1099-MISCs are filed within 30 days of the due date. The penalty increases to $110 per form if it's more than 30 days late but submitted by August 1. Then it goes up to $270 per 1099-MISC. Completely disregarding the form can result in a fine of $550 per form.
It's a good idea to review the 1099-MISC filing requirements with your tax professional. The filing threshold is subject to change, so be sure you confirm what it is each year, to ensure that you're in compliance.
- Form 1099-MISC must be issued to any individual or entity to whom you pay $600 or more in the course of a tax year.
- Collect tax ID information upfront from any individuals and business entities you pay, so your business can file these information forms on schedule.
- Stiff penalties can be assessed for failure to timely file Forms 1099-MISC.
Frequently Asked Questions
Does the method of payment affect the rules for filing a Form 1099-MISC?
You're relieved of the responsibility of issuing Forms 1099-MISC for any payments you make by credit card or via an online payment service, such as PayPal. The payment processor is required to complete and file Form 1099-K in those cases.
Are there any business entities that don't require a Form 1099-MISC?
Entities that have incorporated need only be issued a Form 1099-MISC under a few circumstances: if cash payments are made for fish for the purpose of resale, if an attorney who's been paid for services has incorporated, if you've made payments for medical care, or if the payments are made in lieu of tax-exempt interest or dividends. Speak with a tax professional if you've made payments for any of these goods or services, to be sure you're in the clear.