How to Prepare a 1099 Misc
The 1099-MISC is for reporting miscellaneous income to the IRS for tax purposes. Many types of payments apply under the 1099 procedures, but it is most commonly used when you pay an independent contractor or a vendor for a service. 1099 forms are submitted to the tax payer as well as the IRS, provided the payment meets the IRS regulations and limitations.
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Instructions
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1
Supply your company’s name, address and telephone number in the “Payer’s name, street address, city, state, zip code and telephone no.” field. Enter your company’s federal tax identification number and the 1099 recipient’s social security number or tax identification number in the fields provided.
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2
Input the recipient’s name and address in the next two fields. Enter the account number for the payments recorded on this 1099, if applicable. If you have multiple accounts for this recipient, the IRS asks that you record each of them individually.
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3
Enter any rent amounts over $600 paid for the year in box number 1. Input any royalties over $10 for the year in box number two. Include only royalties paid to an author by a publishing company, and list the full amount, before any commissions or other deductions. Report any income over $600 paid during the year that does not fall under any other category provided on the 1099-MISC or other IRS forms in box 3, “Other Income,” on the 10990-MISC.
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4
List the amount of any income tax withholding, including backup withholding. If all of the payments were made in their entirety with no federal tax withholding, enter “0” in this field.
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5
Input any amount paid from fishing endeavors on a boat with 10 or fewer crew members in box 5, if the individual is not paid as an employee. List any health care services or medical insurance payments made over $600 in box 6. Record non-employee compensation of more than $600 in box 7. Non-employee compensation is a payment made for services you receive by an individual who is not an employee of your company. If the service provided is necessary to your business operations, it could be classified as non-employee compensation.
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6
Provide any amounts paid to the individual in place of interest or dividends on loans or financing offered by the individual in box number 8. Enter an “X” in box 9 if you are reporting direct sales of $5,000 or more in products for resale.
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7
Enter payments made to a farmer as insurance proceeds for crop damage in box 10. Leave boxes 11 and 12 blank. Input excess parachute payments in box 13. List payments issued to an attorney in box 14. Enter any deferred payment amounts, or amounts of at least $600 earned but not paid, in box 15A. List any deferred amounts paid out in box 15B.
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8
Input the applicable amounts subjected to state taxes as well as the state number and tax withheld in boxes 16-18. Print the red copy of the form to submit to the IRS. Print two additional copies. Deliver one copy to the taxpayer and the other copy to the applicable state for state income taxes.
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