1099-MISC Instructions and How to Read the Tax Form

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Form 1099-MISC was once a self-employed person’s best friend at tax time. However, this form has recently changed and it no longer includes compensation for non-employees as in the past. You may have looked in Box 7 of Form 1099-MISC to see how much a business or customer said they paid you. Now, this information comes from Form 1099-NEC starting with the 2020 tax year. However, you can still use Form 1099-MISC to report nonemployee compensation for tax years prior to 2020.

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Form 1099-MISC remains largely the same, except for a few boxes, now that non-employee compensation is reported on Form 1099-NEC instead. Think of Form 1099-MISC as one of many sources of expenses or income for your Form 1040 each year. This guide will provide the 1099-MISC instructions you’ll need when preparing your tax return or reporting third-party payments, as well as information on the key pieces of information reported on the new 1099-MISC .

Box 1: Rents

If someone pays you rent for offices, machinery, farmland or pasture, you will report that figure in Box 1. Only amounts of $600 or more need to be reported.

Box 2: Royalties

Box 2 is for reporting any royalties you received over $10. Royalties generally cover license fees for copyrights, patents and trademarks.

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Box 3: Other income

In box 3, include any other income of $600 or more that cannot be reported in any of the other boxes on the form.

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Here are some examples of other types of income reported in this box:

  • A payment or series of payments made to individuals participating in a medical research study
  • Severance pay to former independent insurance salespeople
  • Payments received for punitive damages, damages for non-physical injury or illness and any other taxable damages
  • Prizes or monetary rewards

Box 4: Federal income tax withheld

If you withheld taxes for someone who did not provide a tax identification number or is subject to withholding tax, report that figure here.

Box 7: Payor made direct sales of $5,000 or more

In this case, you only need to enter an “X” in the check box for sales by you of $5,000 or more of consumer products to one person on a buy-sell, deposit -commission or other commission bases for resale other than in a permanent establishment. retail establishment. Do not include a dollar amount here.

Other 1099-MISC Boxes

Most of the remaining boxes on 1099-MISC cover specific payment types.

For example, box 5 covers the individual share of all proceeds from the sale of a catch or the fair market value of an in-kind distribution to each crew member of a fishing vessel. Box 6 relates to payments received for the provision of health care services.

If you get stuck, the back of the form provides a brief description of the types of payments to report in each box.

What are the deadlines for sending and filing 1099-MISC?

The deadline for sending Form 1099-MISC each year to beneficiaries is January 31 following the tax year in which the payments were made. You have more time to file them with the IRS, mail-in forms must be sent by February 28 and March 31 if filed electronically.

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