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Form 1099-MISC is an information return used to report certain miscellaneous income\/payments to the IRS. If you are an independent contractor<\/a>, or you hire an independent contractor, you will most likely need to use this form.<\/p>\n You are required to file Form 1099-MISC for each person to whom you have paid at least $600 during the year in:<\/p>\n \u2022 Rents You must also file Form 1099-MISC if any of the following apply:<\/p>\n \u2022 You paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest Note that you should only use Form 1099-MISC (Miscellaneous Income)<\/a> if the payments are made in the course of your trade or business. Generally, you are considered to be engaged in a trade or business if you operate for gain or profit. Do not report personal payments on Form 1099-MISC.<\/p>\n Form 1099-MISC has many boxes, so it is important to make sure you have entered the payment in the correct box. Some other types of payments, such as interest income, must be reported on a different 1099 information return (e.g., Form 1099-INT). For example, financial institutions reporting dividends and distributions must file Form 1099-DIV. Distributions from pensions, annuities, retirement or profit-sharing plans, IRAs, and insurance contracts must be reported on Form 1099-R. A payment settlement entity (PSE) must file Form 1099-K to report payments made in settlement of reportable payment transactions for each calendar year.<\/p>\n Form 1099-MISC is commonly used to report \u201cnonemployee compensation.\u201d Nonemployee compensation is reported in Box 7 of Form 1099-Misc. To determine whether a person qualifies as an employee or an independent contractor, refer to IRS Publication 15-A (Employer\u2019s Supplemental Tax Guide)<\/a>. Here are some examples of payments that should be reported in Box 7:<\/p>\n \u2022 Professional service fees, such as fees to attorneys (including corporations), accountants, architects, contractors, engineers, etc. If you receive any of these types of payments during the year, you must report the payments as income on your Federal and State tax returns (whether or not you receive Form 1099-MISC from the payer). Items that are reported in Box 7 are generally subject to Self-Employment Tax and may need to be reported on Schedule C of Form 1040.<\/p>\n Form 1099-MISC consists of 5 copies\/parts:<\/p>\n Copy A:<\/strong> For Internal Revenue Service Center<\/p>\n Copy 1:<\/strong> For State Tax Department<\/p>\n Copy B:<\/strong> For Recipient<\/p>\n
\n\u2022 Services performed by someone who is not your employee (including parts and materials)
\n\u2022 Prizes and awards
\n\u2022 Other income payments
\n\u2022 Medical and health care payments
\n\u2022 Crop insurance proceeds
\n\u2022 Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish
\n\u2022 Generally, the cash paid from a notional principal contract to an individual, partnership, or estate
\n\u2022 Payments to an attorney
\n\u2022 Any fishing boat proceeds<\/p>\n
\n\u2022 You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment
\n\u2022 You withheld Federal income tax for a person under the backup withholding rules, regardless of the amount of the payment<\/p>\nForm 1099-MISC: Nonemployee Compensation<\/h3>\n
\n\u2022 Fees paid by one professional to another (such as fee-splitting or referral fees)
\n\u2022 Payments by attorneys to witnesses or experts in legal adjudication
\n\u2022 Payment for services, including payment for parts or materials used to perform the services (if supplying the parts or materials was incidental to providing the service)
\n\u2022 Commissions paid to nonemployee salespersons that are subject to repayment but not repaid during the calendar year
\n\u2022 A fee paid to a nonemployee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer (if the fee and reimbursement total at least $600)
\n\u2022 Payments to nonemployee entertainers for services
\n\u2022 Exchanges of services between individuals in the course of their trades or businesses
\n\u2022 Taxable fringe benefits for nonemployees
\n\u2022 Payments to an insurance salesperson who is not your common law or statutory employee
\n\u2022 Directors\u2019 fees
\n\u2022 Payments to section 530 workers<\/p>\nForm 1099-MISC: Copies<\/h3>\n