Form 1099-MISC is an information return that businesses must file for and issue to individuals to whom they pay more than $600 in a year, or $10 in royalties. This no longer includes independent contractors. These payees used to receive 1099-MISC forms detailing what they were paid, but that's changed. They have their own form beginning in 2020.
You'll need certain information about the individuals and businesses you pay to properly prepare their Form 1099-MISC.
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 basically doesn't have an information return of its own.
Your company must have an EIN or Social Security number. You can apply for one 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. This includes:
- 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
Other Forms of 1099-MISC
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 dates for employers to report miscellaneous income under the terms of the PATH (Protecting Americans from Tax Hikes) Act as well. This date is January 31 as of 2020. There used to be a 30-day filing extension for any returns that carried non-employee compensation, which meant that some taxpayers would face a delay.
Where to Get Form 1099-MISC
The Form 1099-MISC can be downloaded from the IRS website. It also can be ordered for delivery by 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. It's a good practice to have all entities to whom you pay money complete a W-9 form at the time you first do so. It's the “Request for Taxpayer Identification Number and Certification" and it will allow you to collect the necessary information at the onset of your business relationship.
What to Do If You Don't Receive Form 1099-MISC
Contact the company you worked with and ask them to reissue the document if you were paid one of these forms of income but didn't receive a Form 1099-MISC. The form doesn't have to be filed with your tax return the way a W2 is, but it's important to total and report all sources of income on your return that have been reported to the IRS. It 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:
- Austin, TX
- Kansas City, MO
- 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 their 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, using your Social Security number, if you're a sole proprietor and don't have an EIN. This would be the case if you've contracted with other entities and you've met the filing threshold of paying $600 for anyone of them within a 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 is $110 per form if it's more than 30 days late but submitted by August 1. The penalty increases to $270 per 1099-MISC after August 1, and completely disregarding the forms can result in fines 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 know what it is to ensure that you're in compliance.
- Form 1099-MISC must be issued to any individual or entity to whom you pay $600 in the course of a 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.