TaxBandits Knowledge Base

When should I use Form 1099-MISC?

If you’re a business owner/payer paid an amount with the following conditions to any individuals who are not your employee during the year, must use Form 1099-MISC to report payments to the IRS and provide a copy B of Form 1099-MISC to the respective recipients.

1. If paid a minimum of $10 in royalties or broker payments instead of dividends or tax-exempt interest.
2. If paid a minimum of $600 in

• Rents
• Prizes and awards
• Other income payments
• Medical and health care payments
• Payments to an attorney
• Crop insurance proceeds
• Cash paid from a notional principal contract to an individual, partnership, or estate.
• Any fishing boat proceeds
• Section 409A deferrals
• Nonqualified deferred compensation

Also, you can use Form 1099-MISC to report payments made for direct sales of more than $5,000 of consumer products for resale anywhere other than a permanent retail establishment.

Even if the payment is less than $600 and withheld any federal income tax under a backup withholding, you must report all of that payment through Form 1099-MISC.

Note: However, do not file Form 1099-MISC if made

• Payments to corporations.
• Employee income.
• Payments to tax-exempt organizations in the United States, the District of Columbia, a U.S. possession, or a foreign government.

For more information about Form 1099-MISC, click here.