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Small Business Tips

How to fill out Form 1099-MISC for taxes

Manasa Reddigari
April 19, 2019

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Do you employ an independent contractor and expect to pay him or her $600 or more this year? Don't forget to fill out IRS Form 1099-MISC. This reports your non-employee compensation to your contractor and the IRS.

Let's go over the 1099-MISC instructions, as well as why you may need to fill one out.

What is Form 1099-MISC?

The IRS requires any company or person who makes certain types of payments to report them on a 1099-MISC form. This form includes a variety of payments but the most common use is to report earnings when you work as an independent contractor.

If you currently enlist the services of a non-employee worker, you may have already asked for Form W-9. Non-employee workers can include a subcontractor, attorney or accountant.

This includes the worker's name and taxpayer identification number.

This information is vital in filling out Form 1099-MISC. Your contractor will use this to report on their taxes the amount your business compensated him. Even if the entity you compensate is a business, you are still required to issue a 1099. The exception to this is if the entity is a corporation or other 1099-exempt organization.

1099-MISC instructions: How to fill out the form

Before you fill out a 1099-MISC form, ensure that you order Form 1099-MISC online or by phone.

Payer and recipient information

In the unnumbered boxes on the top of the form, specify your business' name, street address, city or town, state or province, country and ZIP code and telephone number. Below, specify your business' taxpayer identification number and your contractor's taxpayer identification number in the form of an SSN or EIN. Then, specify your recipient's name, street address, city or town.

How to fill out boxes 1-4 on 1099-MISC

In boxes 1-2, enter rental payments of $600 or more and gross royalty payments of $10 or more. Have other income to report that will not be reported elsewhere on the form? Enter it in Box 3 if the amount is $600 or more. Any backup withholding can be specified in box 4.

How to fill out boxes 5-6 on 1099-MISC

Enter fishing boat proceeds in box 5 if applicable. Report payments you make to a physician or another provider or supplier of health care services to the business in box 6.

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How to fill out box 7 on 1099-MISC

This is perhaps the most critical field on a 1099. This box should be used to enter non-employee compensation of $600 or more. This can include, among other forms, payment for freelance services, commissions, fees or prize money.

How to fill out boxes 8-14

Use box 8 to specify aggregate sums of $10 or more in substitute payments made in lieu of interest or dividends. If you made $5,000 or more in direct sales, make a checkmark in box 9. You use box 10 to report crop proceeds of $600. Reserve boxes 13 and 14 for excess golden parachute payments or gross attorney proceeds of $600 or more.

How to fill out boxes 15a and 15b on 1099-MISC

If applicable, enter any Section 409 deferrals and deferral amounts included as income.

How to fill out boxes 16-18 on 1099-MISC form

Enter state tax withheld from payment in box 16 along with the payer state's name and identification number in box 17 and the amount of state payment in box 18.

All set on how to fill out Form 1099? Once you've finished, send a copy to your contractor by January 31. Send another copy to the IRS along with Form 1096 by February 28 (March 31 if you file electronically).

1099 reporting requirements for small business

The IRS has a four-condition test for whether payments qualify for 1099-MISC reporting:

  • Payment is not to an employee
  • It's for a service related to your business, as opposed to a product
  • Payments totaled $600 or more for the year
  • The payment went to a sole proprietor, partnership, LLC or an estate

Small business owners file a copy of the 1099-MISC to the IRS and then to the person or persons they've paid for services. You can file your 1099-MISC forms through the mail or through e-filing. If you're filing 250 or more 1099-MISC forms, you must e-file.

What is the deadline for sending 1099 forms?

You must provide a recipient a copy by January 31. This is also the paper or electronic filing due date to the IRS.

What are the fines for missing the Form 1099 deadline?

You can face fines for not sending out your 1099 Forms by the deadline. For 1099 filed up to 30 days late, you can face a $50 per 1099 fine. For those filed more than 30 days late, it's $100 per 1099. If you don't file at all, it can be up to $260 per 1099 form.

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MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

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MileIQPricing
Open MenuClose Menu

Do you employ an independent contractor and expect to pay him or her $600 or more this year? Don't forget to fill out IRS Form 1099-MISC. This reports your non-employee compensation to your contractor and the IRS.

Let's go over the 1099-MISC instructions, as well as why you may need to fill one out.

What is Form 1099-MISC?

The IRS requires any company or person who makes certain types of payments to report them on a 1099-MISC form. This form includes a variety of payments but the most common use is to report earnings when you work as an independent contractor.

If you currently enlist the services of a non-employee worker, you may have already asked for Form W-9. Non-employee workers can include a subcontractor, attorney or accountant.

This includes the worker's name and taxpayer identification number.

This information is vital in filling out Form 1099-MISC. Your contractor will use this to report on their taxes the amount your business compensated him. Even if the entity you compensate is a business, you are still required to issue a 1099. The exception to this is if the entity is a corporation or other 1099-exempt organization.

1099-MISC instructions: How to fill out the form

Before you fill out a 1099-MISC form, ensure that you order Form 1099-MISC online or by phone.

Payer and recipient information

In the unnumbered boxes on the top of the form, specify your business' name, street address, city or town, state or province, country and ZIP code and telephone number. Below, specify your business' taxpayer identification number and your contractor's taxpayer identification number in the form of an SSN or EIN. Then, specify your recipient's name, street address, city or town.

How to fill out boxes 1-4 on 1099-MISC

In boxes 1-2, enter rental payments of $600 or more and gross royalty payments of $10 or more. Have other income to report that will not be reported elsewhere on the form? Enter it in Box 3 if the amount is $600 or more. Any backup withholding can be specified in box 4.

How to fill out boxes 5-6 on 1099-MISC

Enter fishing boat proceeds in box 5 if applicable. Report payments you make to a physician or another provider or supplier of health care services to the business in box 6.

How to fill out box 7 on 1099-MISC

This is perhaps the most critical field on a 1099. This box should be used to enter non-employee compensation of $600 or more. This can include, among other forms, payment for freelance services, commissions, fees or prize money.

How to fill out boxes 8-14

Use box 8 to specify aggregate sums of $10 or more in substitute payments made in lieu of interest or dividends. If you made $5,000 or more in direct sales, make a checkmark in box 9. You use box 10 to report crop proceeds of $600. Reserve boxes 13 and 14 for excess golden parachute payments or gross attorney proceeds of $600 or more.

How to fill out boxes 15a and 15b on 1099-MISC

If applicable, enter any Section 409 deferrals and deferral amounts included as income.

How to fill out boxes 16-18 on 1099-MISC form

Enter state tax withheld from payment in box 16 along with the payer state's name and identification number in box 17 and the amount of state payment in box 18.

All set on how to fill out Form 1099? Once you've finished, send a copy to your contractor by January 31. Send another copy to the IRS along with Form 1096 by February 28 (March 31 if you file electronically).

1099 reporting requirements for small business

The IRS has a four-condition test for whether payments qualify for 1099-MISC reporting:

  • Payment is not to an employee
  • It's for a service related to your business, as opposed to a product
  • Payments totaled $600 or more for the year
  • The payment went to a sole proprietor, partnership, LLC or an estate

Small business owners file a copy of the 1099-MISC to the IRS and then to the person or persons they've paid for services. You can file your 1099-MISC forms through the mail or through e-filing. If you're filing 250 or more 1099-MISC forms, you must e-file.

What is the deadline for sending 1099 forms?

You must provide a recipient a copy by January 31. This is also the paper or electronic filing due date to the IRS.

What are the fines for missing the Form 1099 deadline?

You can face fines for not sending out your 1099 Forms by the deadline. For 1099 filed up to 30 days late, you can face a $50 per 1099 fine. For those filed more than 30 days late, it's $100 per 1099. If you don't file at all, it can be up to $260 per 1099 form.

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