1099-MISC Form: Declare Miscellaneous Payments Correctly
The basic US taxpayer document, Form 1099, has many variations. 1099 MISC Form documents various nonemployee compensations during the tax year. Read more about this file and the features of filling it out below.
What Is 1099-MISC Used For?
1099-MISC 2022 is used by businesses that made payments during the tax year that the IRS qualifies as “nonemployee.” Such payments should not be less than $10, and the total compensation must exceed $600 for the entire reporting period. Full-time or part-time employees’ salaries do not need to be reported in this form. The IRS provides a detailed income list subject to official documentation; all payments are not subject to self-employment tax.
Who Files 1099 MISC?
Since 1099 MISC contains information about various payments to nonemployees, it should be completed by the businesses and legal entities that made these payments. To do it, they had to meet two conditions: royalties must not be less than $10, and in total, they must be at least $600 per year. The category of recipients of payment includes only persons who are not considered regular employees.
Businesses that have made payments in the following categories should complete Form 1099-MISC:
● Rent;
● Crop insurance;
● Bonuses and awards;
● Medical payments;
● Compensations to an attorney;
● Fishing proceeds, etc.
Keep in mind that self-employed people who received these payments do not need to complete Form 1099 Miscellaneous. The payer sends the finished document to all recipients of payments.
How to Get Form 1099-MISC
The two most convenient options for obtaining 1099 MISC are the IRS website and PDFLiner. Below we will tell you how to find the desired document on each of them.
→ IRS site
The US Internal Revenue Service’s official website presents all the forms taxpayers use throughout the country. To find the right form, you need to do the following:
1. Go to the IRS website.
2. In the search bar, type the name of a document; in our case, it is the 1099-MISC Form.
3. Download the form in PDF format to your device.
Here you can also find a list of nonemployee compensations subject to this document. The IRS website also publishes new instructions for filling out the templates. The disadvantage of this method is that you cannot fill out the form directly on the site.
→ PDF Liner
The PDFLiner collection contains several million templates, including all tax forms in the latest editions. To find the one you need, follow these steps:
1. Go to the PDFLiner website.
2. In the search bar at the top of the page, start typing the document’s name, “1099,” and the service will offer all available options.
3. Tap/click on Form 1099-MISC to access the required file.
The advantage of PDFLiner over the IRS website is that you can complete the form on the spot without wasting time looking for other services. Enter all the necessary information in the editor that opens and send the finished document to all recipients. You can print or save it in the device’s memory if necessary.
How to Fill Out a 1099 MISC Form
The 1099 MISC Form is pretty easy to fill out. Here is the information you need to provide:
1. Data about the payer (i.e., you): name, exact address, telephone number, and TIN.
2. Information about the payee: name, address, account number, and TIN. If you hire a person from abroad, make sure you write the address correctly and include the foreign postal code. You can take this data from the W-9s, which recipients fill out themselves.
3. Now, you can proceed to fill out the payment and tax lines (from 1 to 15 points inclusive). Enter information only in those blocks that relate to the current situation:
○ Rents;
○ Royalties;
○ Other income;
○ Income tax withheld (federal);
○ Fishing boat proceeds;
○ Medical payments;
○ Crop insurance compensations;
○ 409A deferrals, and so on.
4. Lines 16, 17, and 18 should only be completed if you are a CF/SF Program member.
Note that the standard template on the IRS and PDFLiner sites has eight sheets. Three of them are instructions from the tax office on filling out and sending finished documents, as well as guidelines for recipients if they find errors and inaccuracies. The rest are copies of a one-page form that are needed to be sent to different recipients:
● Copy A (red ink) is submitted to the IRS;
● Copy 1 is for the State Tax Department;
● Copy B is transferred to the payee;
● Copy 2 is filled out only upon request and is submitted together with the recipient’s tax return;
● Copy C remains with you for internal records.
Be careful when filling out this form because recipients use income information from 1099-MISC to calculate taxes due.
1099 MISC vs. 1099 NEC
The NEC form appeared relatively recently. The 1099-MISC version before 2020 included lines specifying payments to independent contractors. After the 2020 revision, all such payments subject to self-employment tax should be reported in 1099-NEC. If you hire freelancers, self-employed, independent suppliers, and similar workers, their compensation falls under self-employment tax, which means you need to use 1099-NEC.
Conclusion
Form 1099-MISC is designed to provide information about nonemployee compensations that you, as a business owner, made during the tax year. The deadline for submitting this document electronically is March 31st, and on paper – February 28th. Use this guide to do everything without mistakes.
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