Instructions for 1099 Misc
If you have a business and pay workers who are not employees for services rendered, you must issue them a Form 1099-MISC at year-end. An additional copy must be sent to the Internal Revenue Service. Usually, independent contractors receive Form 1099-MISC and must report their 1099-MISC income as self-employment income. However, there are some other possible entries on a 1099-MISC that must also be entered correctly.
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Instructions
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File rents in Box 1 of Form 1099-MISC. If you pay over $600 in rental fees for pasture land, office space or business machines, enter the amount paid in Box 1.
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Enter gross royalties paid in Box 2. If you paid royalty amounts in excess of $10 before reduction for severance or other withheld taxes, they should appear in Box 2.
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3
Report other income in Box 3. Box 3 is the most commonly used box on Form 1099-MISC, as payments for services rendered go in this box. This box captures all income in excess of $600 that does not apply to any other box on the 1099. If you paid out sweepstakes winnings for which no amount was gambled, you should enter the amount here.
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Enter taxes withheld in Box 4. If workers neglected to provide you with a taxpayer identification number, you should have withheld 28 percent of their income upon payment. Enter the amount withheld in Box 4.
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Place fishing boat proceeds in Box 5. The fair market value of an in-kind distribution or the share of a crew member's proceeds from the sale of a catch should appear in Box 5.
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Fill in Box 6 with medical payments. Payments made to physicians or health care providers in the course of your business in excess of $600 should be reported here.
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Enter non-employee compensation in excess of $600 in Box 7. Fees, commissions, prizes and awards for your non-employees should appear here. Included here are expenses paid for the use of an entertainment facility and oil and gas payments for a working interest.
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List unusual payments in Boxes 8 through 18. Follow the instructions for Form 1099-MISC to complete any of the very rare payments in the remaining boxes. The remaining 1099-MISC categories you may have to complete are excess golden parachute payments, gross proceeds paid to an attorney, payments in lieu of dividends or interest, direct sales of $5,000 or more intended for resale, crop insurance proceeds, section 409A deferrals and state payment information.
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Submit forms to workers and the IRS. After you complete your 1099-MISC forms, send the appropriate ones to each of your workers or to the appropriate recipients based on how you completed the 1099. You must also send a copy of each 1099 to the IRS when you file your corporate taxes.
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References
- Photo Credit A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com
