Confused in reading Form 1099-MISC Boxes? No worries, we are here to help you with understanding of what is 1099-MISC Form and how to read Form 1099-MISC Boxes And Descriptions.
What is Form 1099-MISC?
IRS Form 1099-MISC is used to report miscellaneous payments made. File Form 1099-MISC for each person to whom you have paid during the year:
At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
At least $600 in:
• Rents.
• Services performed by someone who is not your employee.
• Prizes and awards.
• Other income payments.
• Medical and health care payments.
• Crop insurance proceeds.
• Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
• Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
• Payments to an attorney.
• Any fishing boat proceeds.
• In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
How Read A 2019 Form 1099-MISC Boxes
2019 Form 1099-MISC Boxes and Descriptions.
- Box 1 — Rents
- Box 2 — Royalties
- Box 3 — Other Income
- Box 4 — Federal Income Tax Withheld
- Box 5 — Fishing Boat Proceeds
- Box 6 — Medical and Health Care Payments
- Box 7 — Nonemployee Compensation
- Box 8 — Substitute Payments in Lieu of Dividends or Interest
- Box 9 — Payer Made Direct Sales of $5,000 or More
- Box 10 — Crop Insurance Proceeds
- Box 13 — Excess Golden Parachute Payments
- Box 14 — Gross Proceeds Paid to an Attorney
- Box 15a — Section 409A Deferrals
- Box 15b — Section 409A Income
- Box 16 — State tax withheld
- Box 17 — State/Payer’s state no
- Box 18 — State income
Form 1099-MISC Boxes And Descriptions 2019
Let’s understand the Form 1099-MISC Boxes and their purposes.
Box 1 — Rents
Enter amounts of $600 or more for all types of rents, such as any of the following.
• Real estate rentals paid for office space. However, you do not have to report these payments on Form 1099-MISC if you paid them to a real estate agent or property manager. But the real estate agent or property manager must use Form 1099-MISC to report the rent paid over to the property owner.
• Machine rentals (for example, renting a bulldozer to level your parking lot). If the machine rental is part of a contract that includes both the use of the machine and the operator, prorate the rental between the rent of the machine (report that in box 1) and the operator’s charge (report that as NEC in box 7).
• Pasture rentals (for example, farmers paying for the use of grazing land).
Public housing agencies must report in box 1 rental assistance payments made to owners of housing projects.
Box 2 — Royalties
Enter gross royalty payments (or similar amounts) of $10 or more.
Report royalties from oil, gas, or other mineral properties before reduction for severance and other taxes that may have been withheld and paid. Do not include surface royalties. They should be reported in box 1.
Do not report oil or gas payments for a working interest in box 2; report payments for working interests in box 1 of Form 1099-NEC. Do not report timber royalties made under a pay-as-cut contract; report these timber royalties on Form 1099-S, Proceeds From Real Estate Transactions.
Use box 2 to report royalty payments from intangible property such as patents, copyrights, trade names, and trademarks. Report the gross royalties (before reduction for fees, commissions, or expenses) paid by a publisher directly to an author or literary agent, unless the agent is a corporation.
The literary agent (whether or not a corporation) that receives the royalty payment on behalf of the author must report the gross amount of royalty payments to the author on Form 1099-MISC whether or not the publisher reported the payment to the agent on its Form 1099-MISC.
Box 3 — Other Income
Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form.
Also enter in box 3 prizes and awards that are not for services performed. Include the fair market value (FMV) of merchandise won on game shows. Also include amounts paid to a winner of a sweepstakes not involving a wager. If a wager is made, report the winnings on Form W-2G.
Do not include prizes and awards paid to your employees. Report these on Form W-2. Do not include in box 3 prizes and awards for services performed by nonemployees, such as an award for the top commission salesperson. Report them in box 7.
Box 4 — Federal Income Tax Withheld
Enter backup withholding. For example, persons who have not furnished their TINs to you are subject to withholding on payments required to be reported in boxes 1, 2 (net of severance taxes), 3, 5 (to the extent paid in cash), 6, 7 (except fish purchases for cash), 8, 10, and 14.
Also enter any income tax withheld from payments to members of Indian tribes from the net revenues of class II or class III gaming activities conducted or licensed by the tribes.
Box 5 — Fishing Boat Proceeds
Enter the individual’s share of all proceeds from the sale of a catch or the FMV of a distribution in kind to each crew member of fishing boats with normally fewer than 10 crew members. A fishing boat has normally fewer than 10 crew members if the average size of the operating crew was fewer than 10 on trips during the preceding 4 calendar quarters.
In addition, report cash payments of up to $100 per trip that are contingent on a minimum catch and are paid solely for additional duties (such as mate, engineer, or cook) for which additional cash payments are traditional in the industry. However, do not report on Form 1099-MISC any wages reportable on Form W-2.
Box 6 — Medical and Health Care Payments
Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs.
If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases, the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs.
The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations.
However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States (or its possessions), a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.
Box 7 — Nonemployee Compensation
Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed.
Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box.
What is nonemployee compensation?
If the following four conditions are met, you must generally report a payment as NEC.
• You made the payment to someone who is not your employee.
• You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
• You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
• You made payments to the payee of at least $600 during the year.
Box 8 — Substitute Payments in Lieu of Dividends or Interest
Enter aggregate payments of at least $10 of substitute payments received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer’s securities.
Substitute payment means a payment in lieu of (a) a dividend, or (b) tax-exempt interest to the extent that interest (including original issue discount) has accrued while the securities were on loan. For this purpose, a customer includes an individual, trust, estate, partnership, association, company, or corporation.
Box 9 — Payer Made Direct Sales of $5,000 or More
Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale.
Enter an “X” in the checkbox for sales by you of $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale (by the buyer or any other person) anywhere other than in a permanent retail establishment. Do not enter a dollar amount in this box.
If you are reporting an amount for direct sales of $5,000 or more in box 7, you also may check box 9 on the same Form 1099-MISC.
The report you must give to the recipient for these direct sales need not be made on the official form. It may be in the form of a letter showing this information along with commissions, prizes, awards, etc.
Box 10 — Crop Insurance Proceeds
Enter crop insurance proceeds of $600 or more paid to farmers by insurance companies unless the farmer has informed the insurance company that expenses have been capitalized under section 278, 263A, or 447.
Box 13 — Excess Golden Parachute Payments
Enter any excess golden parachute payments. An excess parachute payment is the amount over the base amount (the average annual compensation for services includible in the individual’s gross income over the most recent 5 tax years).
Box 14 — Gross Proceeds Paid to an Attorney
Enter gross proceeds of $600 or more paid to an attorney in connection with legal services (regardless of whether the services are performed for the payer).
Box 15a — Section 409A Deferrals
You do not have to complete this box.
If you complete this box, enter the total amount deferred during the year of at least $600 for the non-employee under all non-qualified plans. The deferrals during the year include earnings on the current year and prior year deferrals.
Box 15b — Section 409A Income
Enter all amounts deferred (including earnings on amounts deferred) that are includible in income under section 409A because the NQDC plan fails to satisfy the requirements of section 409A.
Do not include amounts properly reported on a Form 1099-MISC, corrected Form 1099-MISC, Form W-2, or Form W-2c for a prior year.
Also, do not include amounts that are considered to be subject to a substantial risk of forfeiture for purposes of section 409A.
Boxes 16–18. State Information
Box 16: State tax withheld | Box 17: State/Payer’s State no. | Box 18: State Income
These boxes may be used by payers who participate in the Combined Federal/State Filing Program and/or who are required to file paper copies of this form with a state tax department. They are provided for your convenience only and need not be completed for the IRS.
Use the state information boxes to report payments for up to two states. Keep the information for each state separated by the dash line. If you withheld state income tax on this payment, you may enter it in box 16. In box 17, enter the abbreviated name of the state and the payer’s state identification number.
The state number is the payer’s identification number assigned by the individual state. In box 18, you may enter the amount of the state payment. If a state tax department requires that you send them a paper copy of this form, use Copy 1 to provide information to the state tax department. Give Copy 2 to the recipient for use in filing the recipient’s state income tax return.
For more information about 2019 Form 1099-MISC, you can check out this IRS publication.
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