Businesses and individuals can utilize IRS Form 1099-MISC, Miscellaneous Information, to report the payment of specific eligible expenses throughout the course of a calendar year. In addition to serving as a receipt of payments for the payee, the form also serves as a filing for the IRS, which they utilize when preparing their own tax returns.
Payments that must be reported on Form 1099-MISC are often anything but clear, and unfortunately, mistakes can be costly. In this guide, we show you everything you need to know about when and how to file Form 1099-MISC.
Key Takeaways
- Form 1099-MISC is a tax form that reports a variety of payments that your business makes to different individuals throughout the year.
- When you pay $600 or more in prizes and awards, rent, health and medical care payments, and other similar items, you will generally use Form 1099-MISC.
- You can file Form 1099-MISC with the IRS through the Filing Information Returns Electronically (FIRE) system.
What is Form 1099-MISC Used For?
Businesses utilize Form 1099-MISC to report miscellaneous taxable payments that aren’t covered by other tax forms to a wide range of payees, including:
- Rent
- Royalties
- Prizes and awards
- Healthcare payments
- Payment to an attorney
Who Must File Form 1099-MISC?
Form 1099-MISC must be filled out and given by a person who has paid another person at least $10 in royalties, broker fees in place of dividends, or tax-exempt interest.
It’s also sent to each person to whom you paid at least $600 during the calendar year in the following categories: rents, prizes and awards, other income payments, medical healthcare payments, crop insurance proceeds, cash payments for fish purchased from anyone who makes a living catching fish, cash paid from a notional principal contract to an individual, partnership or estate, payments to an attorney, or any fishing boats.
When is Form 1099-MISC Due?
The due date for Form 1099-MISC is February 28th of the year after the tax year if you file on paper or March 31 if you file electronically.
Where is Form 1099-MISC Filed?
There are two ways to file Form 1099-MISC. You can mail it to Internal Revenue Service Center, P.O. Box 219256, Kansas City, MO 64121-9256 or file it electronically using tax software.
Filing electronically is typically more efficient as it helps avoid processing delays and typically gets reviewed by the IRS faster than paper forms.
Where Do I Find the Latest Version of Form 1099-MISC?
The newest version of Form 1099-MISC can be found on the IRS website. It’s important to check the form annually, as the IRS does change the form and instructions regularly.
How Do I Find the Instructions for Form 1099-MISC?
You can find the instructions for completing Form 1099-MISC on the IRS website. The 1099-MISC instructions can be overwhelming. Therefore, it’s recommended to use a professional tax service like Cleer Tax to ensure comprehension and accuracy.
Why is it Important to File Form 1099-MISC?
The purpose of Form 1099-MISC is to track and account for listed payments as a business deduction for business payers and income for payees and to avoid possible penalties for non-compliance to the IRS and non-filing.
Are There Penalties for Mistakes in Filing Form 1099-MISC?
Businesses that intentionally fail to accurately complete Form 1099-MISC are subject to fines starting at $570 per form (the tax year 2022), or 10% of the income reported on the form, with no upper limit.
What Information is Required to File Form 1099-MISC?
The following information is needed to file Form 1099-MISC:
- Your name and address
- Your Identification Number (TIN), which is either your Social Security Number (SSN) or employer identification (EIN)
- The name and address of the person or entity that paid you
- The amount of money you received for the tax year
- Rent (box 1)
- Prizes and awards (box 3)
- Other income payments (box 3)
- Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3)
- Any fishing boat proceeds (box 5)
- Medical and health care payments (box 6)
- Crop insurance proceeds (box 9)
- Payments to an attorney (box 10)
- Section 409 A deferrals (box 12)
- Non-qualified deferred compensation (box 14)
Do I Need to File Form 1099-MISC?
If you received the types of payment mentioned above, you need to file Form 1099-MISC.
It’s not always clear if you need to file Form 1099-MISC since it covers so many different types of payments. If you’re unsure about whether or not you need to file, we recommend that you book a tax consult. Failing to file accurately or at all could result in hefty fines from the IRS.
How Do I Prepare Form 1099-MISC?
Make sure to send the appropriate copies of Form 1099-MISC to the IRS and the receiver after you’ve finished filling it out. Additionally, you need to submit Form 1096, Annual Summary, and Transmittal of U.S. returns of information to the IRS. IRS Forms= 1099-MISC is summarized in Form 1096.
Form 1099-MISC can be sent or electronically filed, but if you need to submit 250 or more information returns for the year, you must do so electronically.
The IRS will send your e-filed 1099 forms to your state if it takes part in the Combined Federal/State Filing Program (CF/SF).
How Long Does it Take to Prepare Form 1099-MISC?
Filing 1099-MISC can be a relatively quick process if you track your expenses carefully throughout the year. However, having to track down the information needed to complete the Form 1099-MISC without good bookkeeping can take days.
What are Common Errors When Completing Form 1099-MISC?
While there are several errors that you can make when filing out this form, some of the common errors include inaccurate:
- Money amounts
- Codes
- Checkboxes
- Taxpayer Identification Number (TIN)
- Payee name
If you make an error when completing a 1099-MISC, it’s important to send an amended form as soon as possible.
Do You Have Any Tips for Filing Form 1099-MISC Correctly?
Follow the IRS instructions on this link or hire a professional to complete and file Form 1099-MISC on your behalf. In addition, it’s always easier to complete the form if you’ve kept meticulous records throughout the year. Consider getting bookkeeping services if you find yourself spending hours trying to track down expenses come tax time.
Can I get a Refund from Filing Form 1099-MISC?
No, you will not get a refund for filing Form 1099-MISC. However, some of the costs associated with a 1099-MISC may be deductible and ultimately reduce your overall tax liability.
What if I File Form 1099-MISC Late?
If your business fails to file Form 1099-MISC by the deadline, the penalty varies from $50 to $280 per form (tax year 2022), depending on how long past the deadline the business issues the form.
If you’re worried about missing the filing deadline, consider filing an extension to get extra time to file and avoid costly penalties.
Can Cleer Tax Help File Form 1099-MISC?
Yes, with Cleer Tax and Bookkeeping, we can complete and file Form 1099-MISC on your behalf. Check out our tax services page to see how we can help your business, or contact us today!
