1099-MISC Form for Reporting Non-Employee Income

What kind of payments require a 1099-MISC Form? Medical and health care payments, excess golden parachute payments, fees, commissions, rents, or royalties paid, income earned by an independent contractor, payments for prizes, awards, or legal services.

Image by Evan Polenghi © The Balance 2019

The deadline for filing 1099-MISC forms and 1096 transmittal forms is January 31 of the following year. This is the same as the deadline for giving 1099-MISC forms to recipients.

For 2018 tax year forms, the filing deadline is January 31, 2019. There are no extensions allowed for this deadline. You can find details in this article about the annual payroll tax report deadlines. 

What is a 1099-MISC Form?

A 1099-MISC form is used to report miscellaneous income (sometimes called "non-employee income") to the IRS. It is also used to give information on income to the recipients, so they can complete their income tax returns. The 1099-MISC form is an annual wage report form, meaning that it must be prepared, given to workers, and submitted to the IRS on January 31, for the previous tax year.

The 1099-MISC form shows the amount you paid to the recipient during the calendar year, in a box depending on the type of payment. If income tax withholding has been taken from the payments (this is not usual), the total amount of the withholding for the year is included. The tax ID and other information about the recipient also must be included. 

What is a "Non-employee?"

The IRS uses the term "non-employee" to include anyone who provides services to another individual or business. It's a broad category, including freelancers, private contractors (like maintenance services), and outsourcing companies. 

Who Must Receive a 1099-MISC Form?

If you paid $600 or more to a non-employee or $10 or more in royalties during the year, you must send that person a 1099-MISC showing the total amount you paid for that year.

In addition to the minimum monetary amount, the 1099-MISC form is used to record payments to non-employees, including: 

  • Income earned by an independent contractor but not an employee
  • Fees, commissions (to salespeople who are not employees), rents, or royalties paid
  • Payment for prizes, awards, or legal services
  • Excess golden parachute payments
  • Medical and health care payments

If you made payments to a corporation, you probably don't have to give them a 1099-MISC form. There are exceptions to this requirement, including those for attorneys. See this article about who must receive a 1099-MISC form, for more details. 

Before a non-employee can receive a 1099-MISC, they must complete a W-9 form. This form is similar to a W-4 form that new employees must complete at hire. The W-9 form includes name and address and, most important, the recipient's tax identification number. 

How is a 1099-MISC Different from a W-2 Form? 

W-2 forms are the year-end wage and tax reports given to employees. A W-2 form shows the gross taxable earnings of the employees, as well as federal/state withholding and FICA taxes (Social Security and Medicare). 1099-MISC forms are given to non-employees, showing amounts of payments during the year. In most cases, no taxes are withheld, and there's no FICA tax withholding. 

What are the Deadlines for 1099-MISC Forms? 

Submitting to Recipients: The 1099-MISC must be submitted to the payee by January 31 of the following year, so they can use the form to prepare their income taxes.

Filing with the IRS: The 1099-MISC must be submitted to the Internal Revenue Service (IRS) by January 31, for the previous year. 

The exact date changes each year, based on when the deadline falls. If the deadline is a holiday or weekend, the deadline is the next business day. For more details about the exact deadlines for submitting 1099-MISC forms in the current year to workers and to the IRS, see this article with deadlines for the most recent tax year. 

Where Can I Get 1099-MISC Forms?

If you have a payroll service, online business tax software, or accounting software, you may be able to use those to complete the form and file it with the IRS. The best way to file is by using the IRS E-File system.

If you have only a few forms to file, you can use the PDF fillable format online. But this form is fillable only for the state copy, and Copy 1 for the recipient. You can't print out copy A and send it because it's printed in a special red ink. You can get copies of the original at an office supply store.

What Does a 1099-MISC Form Look Like? 

The 1099-MISC is a multi-part form.

  • Copy A is submitted to the IRS by the payer (your business)
  • Copy 1 is submitted to the state tax department by the payer
  • Copy B is for the recipient
  • Copy 2 is given to the recipient for filing with the state tax return.
  • Copy C is kept by the payer.

Before you Prepare Form 1099-MISC

You will need two things before you begin:

  •  A W-9 form signed by the non-employee, in order to gather information on the person's contact information and also, more important, a taxpayer ID number for that person. If you don't have a taxpayer ID or the ID is wrong, you may have to begin withholding taxes (called backup withholding) from the person's 1099 earnings.
  • The total payments for that person or business for the year. Remember, if you haven't paid $600 to that person during the year, you don't need to complete a 1099-MISC form (but the person must still report all the income received). 

    How Do I Prepare Form 1099-MISC? 

    This article takes you step-by-step through the process of completing Form 1099-MISC. You will first need to collect information about each payee. If you don't have a W-9 form signed, you will need to get one. 

    Other Income vs Nonemployee Income

    One confusing part of completing Form 1099-MISC is which box to use for what.

    • Box 7, for non-employee income, is for payments to independent contractors and other non-employees who have done work for you. Include fees, commissions, prizes, and awards to those people or businesses.
    • Box 3, Other income is for payments not reportable in one of the other boxes.

    How to File 1099-MISC Forms with the IRS 

    If you are submitting paper copies of all 1099-MISC forms, you can submit along with a Form 1096 transmittal form. Be sure you get the correct forms for paper filing. 

    It's easier to submit 1099-MISC forms electronically. In this case, you don't need the 1096 transmittal forms.