What the Form Is For

Form 1099-MISC (Miscellaneous Income) is the IRS form businesses and organizations use to report various types of payments made during the year to individuals, partnerships, and certain corporations. Think of it as a receipt that tells both the recipient and the IRS about money that changed hands outside of regular wages.

If you're a business owner, landlord, or organization that paid someone for services or other business-related purposes during 2013, you likely need to file this form. The form covers a wide range of payment types, from rent and royalties to payments for independent contractor services. Essentially, if you paid someone $600 or more during the year for services performed in your trade or business (or $10 or more in royalties), you generally must report it on Form 1099-MISC.

Recipients use this form to report income on their tax returns. The IRS uses it to verify that taxpayers are reporting all their income. It's important to note that this form is only for business-related payments—personal payments don't need to be reported. For example, if you hire someone to paint your home office as a business expense, you'd report it; if you hire someone to paint your personal bedroom, you wouldn't.

When You’d Use It (Including Late and Amended Filings)

Regular Filing Timeline

For 2013 income, businesses must provide Copy B to recipients by January 31, 2014. However, if you're reporting payments in boxes 8 (substitute payments) or 14 (gross proceeds paid to attorneys), you have until February 18, 2014 to furnish copies to recipients.
You must file Copy A with the IRS by February 28, 2014 for paper filing, or March 31, 2014 if filing electronically (IRS.gov).

Late Filing

If you miss these deadlines, file as soon as possible. The IRS assesses penalties for late filing that increase based on how late you are. However, filing late is always better than not filing at all, as penalties continue to accrue and can lead to more serious consequences.

Amended or Corrected Returns

Discovered an error after filing? You must file a corrected Form 1099-MISC. Mark the “CORRECTED” checkbox at the top of the new form and complete all required information correctly. Submit the corrected form to the IRS along with Form 1096. You should also provide a corrected copy to the recipient.
Common reasons for corrections include wrong amounts, incorrect recipient information, or missing taxpayer identification numbers.

Extensions

You can request an automatic 30-day extension by filing Form 8809 before the original due date. Under hardship conditions, you may request an additional 30-day extension (IRS.gov).

Key Rules and Requirements for 2013

Filing Thresholds

You must file Form 1099-MISC if you paid during 2013:

• $600 or more for rents, services, prizes, awards, medical payments, or payments to attorneys
• $10 or more in royalties or broker payments
• Any amount where you withheld federal income tax under backup withholding rules
• $600 or more in cash for fish purchases (for those in that trade)
• $5,000 or more in direct sales of consumer products for resale (IRS.gov)

Who Gets Reported

Generally, report payments to individuals, partnerships, estates, and certain corporations.
Important exception: You typically don't need to report payments to regular corporations, except for medical/health care payments, attorneys' fees, fish purchases, and certain other specific situations.

Electronic Filing Requirement

If you must file 250 or more Form 1099-MISC returns, electronic filing is mandatory unless you receive a hardship waiver. This requirement applies separately to each form type and to original versus corrected returns (IRS.gov).

Taxpayer Identification Numbers (TINs)

You must obtain the recipient's taxpayer identification number (TIN)—either a Social Security Number or Employer Identification Number. Use Form W-9 to collect this information before making payments.
If the recipient doesn't provide their TIN, you may be required to withhold 28% of the payment for backup withholding.

Step-by-Step Filing Process (High Level)

Step 1: Gather Information

Throughout the year, collect Form W-9 from anyone you're paying for services or other reportable items. Track all payments carefully, noting dates, amounts, and purposes.

Step 2: Determine Filing Requirements

Review your payments to identify which ones meet the reporting thresholds. Sort recipients into categories based on payment type (rent, services, royalties, etc.).

Step 3: Obtain Forms

Order official IRS forms or use IRS-approved software to generate compliant forms.
Don’t use photocopies—only original scannable forms or properly formatted substitutes are acceptable (IRS.gov).

Step 4: Complete the Forms

Fill out one Form 1099-MISC for each recipient. Enter amounts in the appropriate boxes based on payment type.
Box 7 (Nonemployee Compensation) is most common for independent contractor payments.
Type entries using 12-point Courier font in black ink, or print clearly if handwriting.

Step 5: Review for Accuracy

Verify all TINs, recipient names match exactly as provided on Form W-9, amounts are correct, and decimal points are included.
Common errors include missing decimals (entering 1500 instead of 1500.00) and mismatched names.

Step 6: File with IRS

Submit Copy A to the IRS along with Form 1096 (transmittal form). Mail to the appropriate service center—Austin, TX for southeastern states, Kansas City, MO for others.
Send by First-Class Mail in flat mailings (don’t fold).

Step 7: Provide Copies to Recipients

Give Copy B to each recipient by the deadline. Keep Copy C for your records for at least three years.

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Employees with Independent Contractors

Many businesses incorrectly issue 1099-MISC to employees. Employees should receive Form W-2, not 1099-MISC.
True independent contractors control how they complete work, provide their own tools, and work for multiple clients.
When in doubt, review IRS Publication 15-A for guidance.

Mistake #2: Forgetting to Get Form W-9 Before Paying

Collect Form W-9 before making the first payment. Requesting TIN information after year-end creates delays and backup withholding complications.
Make Form W-9 part of your onboarding process for all vendors and contractors.

Mistake #3: Reporting in Wrong Boxes

The IRS matches amounts to specific boxes, so putting service payments in Box 1 (Rents) instead of Box 7 (Nonemployee Compensation) causes processing problems.
Box 7 is for services; Box 1 is for rent; Box 2 is for royalties. Read the instructions carefully for each box.

Mistake #4: Duplicate Filing

Don't send the same information to the IRS multiple times. If you discover additional returns after initial filing, submit them with a new Form 1096—don’t re-submit previously filed returns (IRS.gov).

Mistake #5: Using Photocopies or Wrong Year Forms

The IRS scans forms using specialized equipment. Photocopies won't scan properly, and using 2012 forms for 2013 reporting causes processing failures.
Always use original scannable forms for the correct tax year.

Mistake #6: Filing Without Proper Format

Forms must be submitted on full 8½ x 11 inch pages (typically two or three forms per page).
Don't cut, staple, or fold forms. Don't use correction fluid. Even one non-scannable form triggers penalties.

What Happens After You File

IRS Processing

The IRS scans and processes your forms, matching recipient TINs and names against their records. This typically takes several weeks to months.
If everything matches correctly, you likely won't hear anything further.

Recipient Actions

Recipients use Form 1099-MISC to prepare their tax returns. They report the income on Schedule C (self-employed), Schedule E (rents/royalties), or other appropriate forms.
Many recipients must make quarterly estimated tax payments based on this income.

Potential IRS Notices

If the IRS identifies mismatches between the TIN you reported and their records, you'll receive a CP2100 or CP2100A notice.
This notice lists recipients whose information didn't match. You're not penalized for the first notice, but you must request corrected W-9 forms and implement backup withholding if problems persist (IRS.gov).

Penalties for Non-Compliance

For 2013 returns, penalties for failure to file or furnish correct information returns are:

• $30 per return if corrected within 30 days ($250,000 maximum)
• $60 per return if corrected by August 1 ($500,000 maximum)
• $100 per return if corrected after August 1 or not at all ($1.5 million maximum)

Intentional disregard carries minimum penalties of $250 per return with no maximum cap.
However, penalties may be waived if you can demonstrate reasonable cause (IRS.gov).

FAQs

Q1: Do I need to file Form 1099-MISC for payments made to corporations?

Generally, no. Most payments to corporations are exempt from reporting. However, you must report payments to corporations for medical/health care services (Box 6), attorneys' fees (Box 7 or 14), fish purchases (Box 7), and substitute payments (Box 8) (IRS.gov).

Q2: What's the difference between Box 7 (Nonemployee Compensation) and Box 3 (Other Income)?

Box 7 is for payments to independent contractors for services performed. Box 3 is for miscellaneous income not fitting other categories, such as prizes, awards not for services, or deceased employee wages paid after year of death.
Box 7 income is subject to self-employment tax; Box 3 income may not be.

Q3: I paid someone $590 in services—do I need to file?

No. The $600 threshold means you only file if total payments during the year reach $600 or more. Keep good records in case you make additional payments later in the year that push the total over $600.

Q4: What if a contractor refuses to provide their Social Security Number?

You must backup withhold 28% from their payments if they don't provide a TIN.
Report the gross payment on Form 1099-MISC and the withheld amount in Box 4. Deposit the withheld amount with the IRS using Form 945.
The contractor may face penalties for refusing to provide their TIN.

Q5: Can I file Form 1099-MISC electronically if I have fewer than 250?

Yes! While electronic filing is only required for 250 or more forms, the IRS encourages electronic filing for everyone.
It's faster, more accurate, and you get confirmation of receipt. Many accounting software programs generate and e-file these forms (IRS.gov).

Q6: I paid both an attorney and their client as part of a legal settlement. How do I report this?

You must file two Form 1099-MISC returns.
Report the payment to the attorney in Box 14 (Gross proceeds paid to attorney), and report the payment to the claimant in the appropriate box based on the payment type (often Box 3 for other income).
The attorney reports their fee as income and the claimant reports their settlement (IRS.gov).

Q7: What if I discover an error after filing—will I be penalized?

If you file a corrected return promptly upon discovering the error, you may avoid penalties by showing reasonable cause.
The key is acting quickly once you discover the mistake. Don't wait until the IRS contacts you.

Resources

• Form 1099-MISC Instructions: IRS.gov/pub/irs-prior/i1099msc--2013.pdf
• General Instructions for Information Returns: IRS.gov/pub/irs-prior/i1099gi--2013.pdf
• IRS Information Reporting: IRS.gov

Disclaimer: This summary is for informational purposes only and does not constitute tax advice. Consult with a qualified tax professional for your specific situation.