- Form 1099-MISC Changes for 2024
- When Is Form 1099-MISC Required?
- What Payments Are Not Included on Form 1099-MISC?
- How to Fill Out Form 1099-MISC
- How to File Form 1099-MISC
- IRS Form 1099-MISC Checklist
- Penalties for Failing to File Form 1099-MISC
- Additional Forms for Business Payers
- Legal Considerations
Form 1099-MISC Changes for 2024
Unlike many other tax forms, the IRS hasn’t made any significant updates to the 2024 Form 1099-MISC, Miscellaneous Income. Since 2022, it has been a continuous-use form, meaning the fields, details, and instructions remain consistent from year to year.
When Is Form 1099-MISC Required?
Form 1099-MISC is filed with the IRS, and businesses or individuals will file one form for each person who received qualifying income. A single form may report multiple types of income.
Businesses or you as an individual payer should be aware of the three different types of payments that require a 1099-MISC for each payee.
1. Payments of $600 or More
Form 1099-MISC is for certain payments that reach $600 or more. It excludes nonemployee compensation like contractor payments. If you pay someone at least $600 for the following payments, you will have to file a 1099-MISC:
- attorney fees
- cash from a notional principal contract paid to an individual, partnership, or estate
- crop insurance payouts
- fishing boat income
- medical and health care payments
- other income payments
- prizes and awards
- rents
- taxable deferred compensation
2. Payments of $10 or More for Royalties and Broker Payments
If you paid someone $10 or more in royalties or broker payments, you’ll need to report it on Form 1099-MISC. But keep in mind, this applies specifically to royalties—such as payments for using intellectual property like books or music—or broker payments that aren’t tied to dividends or tax-exempt interest.
3. Consumer Product Sales
If you sold $5,000 or more in consumer products to someone, Form 1099-MISC might apply—but here’s the key: this rule only kicks in when the buyer intends to resell those products.
For instance, if you supply goods to a retailer or distributor under a buy-sell or deposit-commission arrangement, you must report those transactions on Form 1099-MISC.
However, personal purchases or small-scale sales to end consumers don’t fall under this category. It’s all about whether the products are headed for resale.
What Payments Are Not Included on Form 1099-MISC?
Some types of compensation might be taxable to the recipient but do not require reporting on Form 1099-MISC. Here are some types of compensation that you can keep off of the 1099-MISC form:
- payments to a corporation (and payments to an LLC that the IRS treats as an S or C corporation)
- payments for storage, freight, telephone, telegrams, merchandise, and similar items
- rent payments to intermediaries like property managers or real estate agents
- wages paid to employees (use Form W-2 instead)
- cost of current life insurance protection
- business travel allowances paid to employees
- payments to tax-exempt organizations
Where Do I Report Nonemployee Compensation?
You can report nonemployee compensation on a separate IRS form called Form 1099-NEC. Nonemployee compensation generally includes payments to independent contractors, such as gig workers and freelancers, for their services.
Form 1099-MISC and 1099-NEC Used to Be Combined
Until 2020, nonemployee compensation was reported on Form 1099-MISC. Now, it has its own form.
How to Fill Out Form 1099-MISC
Form 1099-MISC is short and easy to complete when you have the correct information on hand. Before you begin, organize your data on payments made and to whom during the year. Then, you will fill out the relevant information by category.
Payer Details
Your business is the payer. From the top left, fill in the business name, complete address, and telephone number.
Next, you will add the business taxpayer identification number (TIN), which should be one of these:
- Social Security number formatted as xxx-xx-xxxx
- employer identification number formatted as xx-xxxxxxx
- individual TIN formatted as 9xx-xx-xxxx (only if the business is a sole proprietorship using the owner’s SSN)
Familiarize yourself with three other fields that relate to your business.
1. Box 13
You will add an X to Box 13 only if the business is subject to the FATCA filing requirement. Under FATCA, certain foreign financial institutions must provide information about US account holders to the IRS.
2. Account Number
Add a unique account number in the last box on the left side of the form. You will need an account number if the FATCA box is checked or if you are submitting multiple 1099-MISC forms for the same person.
3. Second TIN Not.
If the IRS notified you more than once within the last three years that the payee’s TIN is incorrect, add an X here.
Recipient Information
The recipient is the person who received the payments reported on the form. Enter the recipient’s TIN, name, street address, city, state or province, country, and ZIP or foreign postal code in the corresponding fields.
Income Types
You will use Boxes 1 through 3, 5 through 12, and 14 through 15 to report amounts paid by income type. You report amounts only when payments during the year exceed the income thresholds noted above.
- Box 1: Enter the total rent paid to the recipient, including rents for office space, pastures, or equipment, unless paid to an intermediary.
- Box 2: Enter royalties paid to the recipient.
- Box 3: Input other income that does not apply to the other boxes here.
- Box 5: If you operate a fishing boat and share income with the crew, use this box to report each recipient’s portion of the proceeds.
- Box 6: Note the business’s total payments to healthcare providers or suppliers here.
- Box 7: If you sold over $5,000 to an individual for resale under a commission-based arrangement, check Box 7 without including the exact dollar amount.
- Box 8: Enter total payments of $10 or more issued to replace tax-exempt interest or dividends.
- Box 9: Enter crop insurance proceeds, paid from an insurance company to a farmer.
- Box 10: Record gross payments made to an attorney.
- Box 11: Add total cash payments your business made to the recipient to buy fish for resale.
- Box 12: The IRS no longer requires reporting of Section 409A deferrals. You can skip this box.
- Box 14: Add excess golden parachute payments, which are amounts above the recipient’s average annual compensation for services from the past five tax years.
- Box 15: Enter nonqualified deferred compensation paid to employees. This should not include amounts reported for prior years on Form 1099-MISC, Form W-2, or Form W-2c.
Do I Have to Report Consumer Goods for Resale on Form 1099-MISC?
You must report sales of more than $5,000 of consumer goods for resale on either Form 1099-MISC or 1099-NEC.
Taxes Withheld
You will report any withholding and related information in Boxes 4 and 16 through 18.
- Box 4: If the business withheld federal taxes from the reported payments, add the withholding amount here.
- Box 16: Enter any state tax withheld from the recipient’s payments in this box.
- Box 17: Add your business’ state TIN in Box 17.
- Box 18: Report the state tax income associated with the payments.
How to File Form 1099-MISC
All businesses can file Form 1099-MISC electronically. Businesses that file nine or fewer returns annually also have the option to file by mail.
Electronic Filing
You will see that the 1099-MISC form has four copies, beginning with the red version titled Copy A. If you are filing electronically, you can skip Copy A. Filing online produces a readable version for the IRS. However, you will need the following copies:
- Copy 1: For the recipient’s state tax department (when required).
- Copy B: For the recipient’s records.
- Copy 2: For the recipient so they can file it with their state income tax return (when required).
Send copies to the recipients by January 31, and e-file your returns by March 31.
Paper Filing
To send in paper filings, you must obtain official printed red copies of the 1099-MISC directly from the IRS. You also need special software to complete them. These official red versions of the form are scannable by the IRS. If you print a red version of the form and complete it manually, the IRS scanning technology cannot read the information.
After you complete the official version (Copy A), you can complete Copies 1, B, and 2. Distribute Copies B and 2 to recipients by January 31. Send Copy 1 to the recipient’s state tax department before the locally established date.
Ensure that you mail Copy A to the IRS by February 28. Include Form 1096, Annual Summary and Transmittal of US Information Returns, with your mailed 1099-MISC forms.
IRS Form 1099-MISC Checklist
Completing Form 1099-MISC can seem like a complex task, but by following a clear checklist, you can ensure the process is smooth and error-free.
- Use Form W-9 to collect the TINs from all individuals who earned miscellaneous income from the business.
- Gather payment totals and tax amounts withheld for all individuals who earned miscellaneous income from the business.
- Label payments made by type, such as attorney payments, fishing boat proceeds, rents, and royalties.
- Verify the business TIN for accuracy.
- Check the payment thresholds to ensure the payments meet the minimum reporting requirements.
- Prepare to file by the appropriate deadlines.
Penalties for Failing to File Form 1099-MISC
Failure to file any information return, including a 1099-MISC, can result in financial penalties. The penalty amount depends on how late the return is:
- $60 per 1099-MISC if you file less than 30 days late
- $130 per 1099-MISC if you file more than 30 days late but before August 1
- $330 per 1099-MISC if you file after August 1
- $660 if you intentionally disregard the filing obligation
Small businesses, which are businesses that make an average of $5 million or less over the past three years, have smaller maximum penalties than large businesses that make an average of more than $5 million over the past three years.
Fine limits only apply to late filings. Intentional filing disregards have no maximum penalties for small or large businesses.
Additional Forms for Business Payers
Form 1099-MISC isn’t the only form to keep on your radar. Here are some other forms you may have to distribute or file as a business payer:
- Form 1099-NEC: Reports nonemployee compensation.
- Form 1096: Summarizes all information returns a business submits to the IRS.
- Form W-9: Lets a business collect taxpayer identification information from payees.
- Form 1099-K: Reports payments made to a business via a credit card processor or another third-party network.
Legal Considerations
LegalTemplates aims to provide the most current information possible on Form 1099-MISC. That said, we cannot advise you on your specific tax situation. We strongly recommend seeking legal advice so that you can rest assured knowing that you distribute 1099-MISCs to the right payees, comply with state filing requirements, and fulfill other duties.
How LegalTemplates Helps
LegalTemplates provides access to the most updated version of Form 1099-MISC through our PDF editor. You can go in and complete Copies 1, B, and 2 before the distribution deadlines. Then, simply download and save them to your computer, where they will be ready to print and send out.
To fulfill your obligation to file with the IRS, you must visit their website. If you want to paper file, obtain Copy A (the red version) from an IRS-approved provider.
