Form 1099-Misc

Written By:
Paul Tracy
Updated August 5, 2020

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.