What is Form 1099-Misc?

According to the IRS, a Form 1099-Misc is appropriate for reporting the following:

  • Payments of $600 or more for services performed for a trade or business by people not treated as its employees (such as subcontractors).
  • Prizes or awards ($600 or more)
  • State and federal tax withheld in conjunction with any of the other activities reportable on the form.
  • Rent payments
  • Royalty payments ($10 or more)
  • Substitute dividend and tax-exempt interest reportable by brokers ($10 or more).
  • Payments to a physician, physician's corporation or other supplier of health and medical services, issued mainly by medical assistance programs or health and accident insurance plans ($600 or more).
  • Payments to fishing boat crew members coming from sale of catch.
  • Crop insurance proceeds.

How Does Form 1099-Misc Work?

Let's say John Doe has a job at XYZ Company, but he freelances on the side for Company ABC. He earns $100,000 from XYZ Company and $5,000 from Company ABC.

Because John Doe is an employee of XYZ Company, he receives a Form W-2 reflecting his $100,000 of earnings. However, Company ABC also sends him (and the IRS) a Form 1099-Misc reflecting his $5,000 of miscellaneous earnings.

Why Does Form 1099-Misc Matter?

Form 1099-Misc is an IRS form used to report miscellaneous income.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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