Form 1099 MISC - Understanding about the Miscellaneous Form

Updated on August 29, 2022 - 10:30 AM by Admin, TaxBandits

IRS Form 1099 MISC is used to report the miscellaneous payments made for rent, fishing boat revenues, crop insurance proceeds, medical and health care payments, prizes, and rewards. It is also used to report self-employed individuals for their work.

In addition, the form is also used to report the direct sales you made of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

In this article, we will learn about Form 1099-MISC, the role of the payer, payee/contractor, 1099 MISC due dates and penalties.

The following are the topics covered in this article:

1. What is Form 1099-MISC?

IRS Form 1099-MISC is an information return used to report the miscellaneous payments made to any self-employed individuals for their work during the calendar year.

The business owner/payer is responsible for preparing and filing Form 1099-MISC with the IRS for each of the individuals.

After reporting payments, the payer must furnish copy B of Form 1099-MISC to the respective recipients.

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2. Who is required to file Form 1099-MISC?

A business owner/payer has to file Form 1099-MISC at the end of the tax year if the payment made to the contractor(s) satisfies the following conditions:

  • If paid a minimum of $10 in royalties or broker payments instead of dividends or tax-exempt interest.
  • If paid a minimum of $600 in
  • Rents
  • Prizes and awards
  • Other income payments
  • Medical and health care payments
  • Payments to an attorney
  • Crop insurance proceeds
  • Cash paid from a notional principal contract to an individual, partnership, or estate
  • Any fishing boat proceeds
  • Section 409A deferrals
  • Nonqualified deferred compensation

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3. What information must be reported on Form 1099-MISC?

A payer must report their business details, the contractor’s details, and then the payment details
in Boxes 1 -17.

  • PAYER’S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no.
  • Payer’s TIN
  • Recipient’s TIN
  • Recipient’s Name
  • Residential address
  • Check box for FATCA filing requirement

From Box 1 to Box 18, the payer must report various payments and tax withheld.

  • Box 1: Rents

  • Box 2: Royalties

  • Box 3: Other income

  • Box 4: Federal income tax withheld

  • 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 a recipient for resale (Check this box, if required)

  • 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 13: FATCA Filing Requirement

  • Box 14: Excess golden parachute payments

  • Box 15: Nonqualified deferred compensation

  • Box 16: State tax withheld

  • Box 17: State/Payer’s state no

  • Box 18: State income

Want to know how to fill out Form 1099-MISC?

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4. What is the filing deadline for 1099-MISC?

For the tax year 2022, the Form 1099-MISC filing deadlines:

Recipient copy Paper filing E-filing
January 31, 2023

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February 28, 2023

IRS Recommend to file 1099 MISC electronically for quick processing and
instant approval

March 31, 2023

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in minutes.

Note: The deadline for sending COPY B to the recipient is February 15, 2023, if you report payments only in box 8 or 10.

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5. What is the difference between Form 1099-MISC and
1099-NEC?

Until 2019, every business owner/payer used Form 1099-MISC to report both the miscellaneous income and other nonemployee compensations (NEC) paid to independent contractors and other self-employed individuals.

There was confusion amongst the payers and payees, as there were two different filing deadlines for the 1099-MISC.

One specific date for completing and filing Box 7, NEC, and another deadline for completing the rest of the form was confusing. To eliminate this ambiguity, the IRS removed the nonemployee compensation reporting column on Form 1099-MISC and reintroduced the Form 1099-NEC to report non employee compensation for tax year 2020.

Let’s see how 1099-MISC is different from 1099-NEC.

Form 1099-NEC is drafted in such a way specifically to report nonemployee compensation, whereas
Form 1099-MISC is used to report other miscellaneous expenses.

Form 1099-NEC isn’t a replacement for 1099-MISC. Form 1099-NEC is just replacing the use of 1099-MISC for reporting independent contractor payments.

According to IRS, the combination of the four conditions defines the reportable nonemployee compensation:

  • Payments made to someone who is not your employee.
  • Payments made for services in the course of your trade or business.
  • Payments made to an individual, partnership, estate, or, in some cases, a corporation.
  • A Payment of $600 or more for the calendar year.

Note: Due to the removal of box 7 from 1099-MISC, the IRS has released an updated version of Form 1099-MISC.

Click here For additional information on the differences between 1099-MISC and 1099-NEC

6. What are the Form 1099 MISC Form 2021 updates?

IRS Form 1099 MISC has been updated with big changes in the last two years. Until 2019, every payer used Form 1099-MISC to report payments made to independent contractors, including non employee compensations in box 7. Then for the 2020 tax year, to avoid confusion among the payers, the IRS re-introduced the form 1099 NEC.

Now the Form 1099-MISC is primarily used to report Miscellaneous Information.

For the tax year 2021, IRS has undergone some small changes in the form 1099 MISC. The most notable change is Form 1099-MISC’s title has changed to Miscellaneous Information. Previously it was Miscellaneous Income. Also, 1099-MISC Box 7 and Box 11 have updated the fields.

Want to know the 1099-MISC Changes?

The IRS has updated the Box fields in 1099 MISC. Learn more about the IRS changes for the
2021 tax year.

7. What is the penalty for the late filing of 1099 MISC?

It is necessary to file 1099-MISC with the IRS on or before the deadline. If you fail to do so, you are subject to late filing penalties based on how late you file.

Conditions which attracts penalty

  • Furnishing incorrect information on a return
  • Failure to provide the required information
  • Late filing of returns
  • Paper filing when you are required to file electronically ( E-file 1099-MISC, if you have 250 or more information returns )
Delaying Period Large Businesses with Gross Receipts of More Than $5 Million Small Businesses with Gross Receipts $5 Million or Less
Filing up to 30 days late $50 per return $50 per return
Filing between 31 days after the deadline and
August 1
$110 per return $110* per return
Filing after August 1 or not at all $280 per return $280* per return
Intentional Disregard of Filing Requirements $560 per return $560 per return

Know about the penalty rates for Form 1099-MISC under different conditions.

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Avoid your 1099-MISC Penalties

Payers can use TaxBandits new scheduling feature to file Form 1099-MISC on a selected future date. This allows time for payers to revise the form freely without penalty. Make sure the scheduling date is on or before the actual IRS deadline.

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