Form 1099-MISC Instructions & Tax Reporting Pointers

The Purpose of Filing Form 1099-MISC

Prior to 2020, the 1099-MISC was used to report a variety of payments including payments to independent contractors. Beginning with 2020, payments made to independent contractors are reported via 1099-NEC.

Who Gets a 1099-MISC?

Payments covered by the 1099-MISC include:

  • At least $10 in royalties, such as payments to authors, musicians and artists
  • At least $10 in broker payments in lieu of dividends or tax-exempt interest
  • Rents, such as office space and machine rentals, when paid to owner
  • Prizes and awards
  • Medical and health care payments
  • Cash payments to fishermen
  • Crop-insurance proceeds
  • Payments to attorneys
  • Any direct consumer-product sales of at least $5,000 to a buyer for resale anywhere other than a permanent retail establishment

Because the box relating to payments to independent contractors has been removed from 1099-MISC, the box numbers have been changed from previous years.

Basic 1099-MISC Filing Instructions

To complete a 1099-MISC, you'll need to supply the following data:

Business information – Your Federal Employer ID Number (EIN), your business name and your business address.

Recipient's ID Number – The recipient's Social Security number or Federal Employer ID Number (EIN).

Payment Amounts – Enter amounts paid in the appropriate box:

  • Rents
  • Royalties
  • Other Income
  • Fishing-boat proceeds
  • Medical and health care payments
  • Substitute payments in lieu of dividends or interest
  • Direct sales of $5,000 or more of consumer products for resale
  • Crop-insurance proceeds
  • Excess golden-parachute payments
  • Gross proceeds paid to an attorney

Section 409A Deferrals and Income - Box 12 requires you to record Section 409A deferrals and income, which pertains to non-qualified deferral compensation plans.

State and Local Information - Enter the amount of state tax withheld (Box 15), the state/payer's state number (Box 16) and state income (Box 17). If you need to enter information for more than two states, you should complete another 1099-MISC for the information.

There may be instances in which you need to provide both a 1099-MISC and 1099-NEC to the same individual, however that will depend on the business conducted with them in that year. If you are unsure it’s always best to consult a tax attorney in order to remain compliant.

Tax Forms Recipient Deadline E-file Deadline
1099-MISC
(No Data in Boxes 8 or 10)
2/1/2021
Monday
3/31/2021
Wednesday
1099-MISC
(With Data in Boxes 8 or 10)
2/16/2021
Tuesday
3/31/2021
Wednesday
Basic 1099-MISC Filing Instructions

Breaking Down the Multi-Part 1099-MISC

The 1099-MISC is a multi-part form that is handled as follows:

Copy A — File with IRS by the paper or electronic-filing deadline.

Copy 1/State Copy — File with the appropriate state taxing authority, if applicable.

Copy B — Distribute this copy to individuals, who then file it with their federal income tax return. You will meet the IRS’ distribution requirement if the form is properly addressed and mailed on or before this due date.

Copy 2 — Distribute this copy to individuals, if applicable. Individuals will then file this copy with their state taxing authority.

Copy C — Retain this copy for your records.

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