Closer Look at 1099-MISC Form

What Is a 1099-MISC Form?

A 1099-MISC form is used to report miscellaneous income (sometimes called “non-employee income”) to the IRS. It is an annual wage report form, meaning that it reports the annual income of an employee.

The 1099-MISC form shows the amount an employer-paid to and employee during that business year. It is unusual for income tax to be withheld, but if it has been taken from the payments the total amount for the year is also included. The tax ID and other information about the employee are listed on this form.

What types of payments report on a 1099?

How does a 1099 work? Businesses use 1099-MISC forms to report payments to non-employees. Non-Employees is a broad term to include freelancers, private contractors, and outsourced companies. This form is also used to report other types of payments, including:

  • Rents (box 1)
  • Services performed by non-employees (box 7)
  • Prizes and awards (boxes 3 and 7)
  • Other income payments (box 3)
  • Medical and health care payments (box 6)
  • Payments to an attorney
  • Direct sales of at least $5,000 of consumer products for resale anywhere other than a permanent retail establishment

Who Receives a 1099-MISC Form?

When do I need a 1099 form? If you paid $600 or more to a non-employee or $10 or more in royalties during the business year, you are required to send that person a 1099-MISC form representing the total amount you paid for that business year.

Keep in mind the difference between a W2 form and a 1099- MISC form. A W2 is required for employees of your business while a 1099-MISC form is given to “non-employees” or contractors.

Keeping track of employees and their tax forms and making sure people get the right forms can be confusing and hard. This is a service a PEO can provide you. Read more about employee leasing and how it could help here and then let us find the best fit for you and your employees. Let us get our multiple quotes from multiple PEOs. Talk to your PEO-OLOGIST.

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