Form 1099-MISC: Miscellaneous Income (2015 Tax Year) – A Complete Guide

Form 1099-MISC is one of the most common tax forms used by businesses to report various types of payments made during the year. If you've hired freelancers, paid rent, or made certain other business payments, you likely need to understand this form. This guide breaks down everything you need to know about the 2015 version of Form 1099-MISC in plain English.

What Form 1099-MISC Is For

Form 1099-MISC (Miscellaneous Income) is an information return that businesses must file with the IRS to report certain payments made during the calendar year. Think of it as a way for the IRS to track income that doesn't come from traditional employment (which would be reported on Form W-2).

The form serves two purposes: businesses file Copy A with the IRS, and recipients receive Copy B to use when preparing their tax returns. This creates a paper trail ensuring that income is properly reported and taxed.

For 2015, you must file Form 1099-MISC if you made any of the following payments in the course of your trade or business:

• At least $10 in royalties or broker payments
• At least $600 in rents, services performed by non-employees, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish purchases, payments to attorneys, or certain notional principal contracts
• At least $5,000 in direct sales of consumer products for resale
• Any amount if you withheld federal income tax under backup withholding rules

Importantly, this reporting requirement applies only to payments made in the course of your trade or business—personal payments don't need to be reported. IRS.gov

When You’d Use Form 1099-MISC (Late/Amended Filings)

Standard Filing Deadlines for 2015

If you need to file Form 1099-MISC for the 2015 tax year, the normal deadlines were:

• To the IRS (paper): February 29, 2016
• To the IRS (electronic): March 31, 2016
• To recipients: January 31, 2016 (for most boxes); February 16, 2016 (if reporting amounts in boxes 8 or 14)

Late Filings

If you missed the deadline, you should still file as soon as possible. The IRS imposes penalties for late filing, but the penalties increase the longer you wait. Filing late is better than not filing at all, as penalties for intentional disregard are much steeper than those for simple tardiness.

Amended/Corrected Returns

If you discover an error after filing, you must file a corrected Form 1099-MISC. To correct a paper form, prepare a new Form 1099-MISC with the correct information and check the "CORRECTED" box at the top. Do NOT check the "VOID" box—that tells the IRS scanning equipment to ignore the form entirely. Include all information on the corrected form, not just the items being changed. You must also provide a corrected statement to the recipient.

Extensions

You can request an automatic 30-day extension to file by submitting Form 8809 (Application for Extension of Time To File Information Returns) by the original due date. Under certain hardship conditions, you may apply for an additional 30-day extension. IRS.gov

Key Rules or Details for 2015

1. Trade or Business Requirement

You only need to file if payments were made in the course of your trade or business. This includes nonprofit organizations, which are considered engaged in trade or business for reporting purposes. Personal payments are never reportable.

2. Corporate Exemption (With Exceptions)

Generally, you don't need to report payments to corporations. However, there are important exceptions—you MUST report payments to corporations for:

• Medical and health care services (Box 6)
• Fish purchases for cash (Box 7)
• Attorneys' fees (Box 7)
• Gross proceeds paid to attorneys (Box 14)
• Substitute payments in lieu of dividends or interest (Box 8)
• Payments to federal executive agencies for services (Box 7)

3. Independent Contractors vs. Employees

Payments to independent contractors generally go in Box 7 (Nonemployee Compensation), while employee payments belong on Form W-2, not Form 1099-MISC. The distinction matters because misclassification can lead to significant tax consequences.

4. Box Accuracy Matters

You must report payments in the correct box. The IRS uses box information to determine whether recipients properly reported their income. Putting attorney fees in the wrong box, for example, can trigger matching problems.

5. Backup Withholding

If a payee doesn't provide a valid Taxpayer Identification Number (TIN), you must withhold 28% of the payment and report it in Box 4.

6. Aggregate Reporting

If you make multiple types of payments to the same person that exceed the thresholds, you can report them all on a single Form 1099-MISC using the appropriate boxes.

7. State and Local Taxes

If you pay state or local sales taxes on behalf of a service provider, include them as part of the reportable payment. However, if sales taxes are imposed on you as the buyer and you simply pay them through the service provider, don't report them. IRS.gov

Step-by-Step: How to Complete Form 1099-MISC (High Level)

Step 1: Gather Information

Collect all payment records for the calendar year, including payee names, addresses, and Taxpayer Identification Numbers (usually Social Security Numbers or Employer Identification Numbers). You should have requested Form W-9 from each payee before making payments.

Step 2: Determine Which Payments to Report

Review your payment records and identify which ones meet the thresholds and criteria for reporting. Remember the $600 threshold for most categories and $10 for royalties.

Step 3: Obtain Proper Forms

Order official IRS forms (you can't photocopy the red Copy A that goes to the IRS) or use IRS-approved substitute forms. You'll need enough copies for the IRS, recipient, state tax authorities (if applicable), and your records.

Step 4: Complete the Forms

• Enter your business information in the PAYER boxes (name, address, and Employer Identification Number)
• Enter the recipient's information in the RECIPIENT boxes (name, address, and TIN)
• Enter payment amounts in the appropriate boxes (1-18)
• Assign an account number if you file multiple forms for the same recipient (optional but recommended)

Step 5: Review for Accuracy

Double-check all TINs, amounts, and that payments are in the correct boxes. Verify addresses are complete and correct.

Step 6: Distribute Copies

• Send Copy A to the IRS with Form 1096 (transmittal form) by the deadline
• Provide Copy B to the recipient by January 31 (or February 16 for boxes 8 and 14)
• Keep Copy C for your records
• Send Copy 1 to state tax authorities if required

Step 7: File Electronically (if required)

If you're filing 250 or more forms, you must file electronically using the IRS Filing Information Returns Electronically (FIRE) system. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Reporting in the Wrong Box

The Problem: Putting attorney fees in Box 3 instead of Box 7, or rent payments in Box 7 instead of Box 1.
How to Avoid: Carefully read the box instructions. Box 7 is for nonemployee compensation (services), Box 1 is for rent, Box 3 is for other income that doesn't fit elsewhere.

Mistake #2: Incorrect or Missing TINs

The Problem: Filing with the wrong Social Security Number or EIN, or leaving it blank.
How to Avoid: Always request Form W-9 before making the first payment. Use the TIN Matching program available through IRS e-services to verify TINs before filing. This is one of the most common errors and triggers backup withholding requirements.

Mistake #3: Failing to Report Payments to Corporations

The Problem: Assuming all corporate payments are exempt when certain types (medical services, attorney fees) must be reported.
How to Avoid: Review the specific exceptions to the corporate exemption rule. When in doubt, file—it's better to over-report than under-report.

Mistake #4: Not Filing Because Amounts Are "Small"

The Problem: Thinking $600 isn't enough to worry about reporting.
How to Avoid: Understand that $600 is the threshold, not an exemption. Even $600.01 must be reported.

Mistake #5: Confusing Employees with Independent Contractors

The Problem: Issuing Form 1099-MISC to someone who should receive Form W-2, or vice versa.
How to Avoid: Review IRS guidelines on worker classification. Generally, if you control what work is done and how it's done, the worker is likely an employee.

Mistake #6: Missing the Recipient Deadline

The Problem: Filing with the IRS on time but forgetting to send copies to recipients by January 31.
How to Avoid: Create a checklist with both deadlines. The recipient deadline is usually earlier than the IRS deadline.

Mistake #7: Checking the VOID Box on Corrections

The Problem: Checking VOID when trying to file a correction, which tells IRS scanners to ignore the form entirely.
How to Avoid: Check "CORRECTED" for amendments, use "VOID" only when submitting a paper return you want completely disregarded (paired with a corrected version). IRS.gov

What Happens After You File

IRS Processing

Once you file Form 1099-MISC, the IRS processes the information and matches it against income reported on recipients' tax returns. This matching process typically occurs many months after filing, sometimes extending into the following year.

For Penalties and Notices

If you filed late, incorrectly, or not at all, you may receive a penalty notice from the IRS. For 2015, penalties ranged from $30 to $100 per form depending on how late the filing was, with maximum annual penalties between $75,000 and $1,500,000 depending on business size. Intentional disregard carries a minimum $250 penalty per form with no maximum limit.

However, penalties may be waived if you can show "reasonable cause" for the failure—such as a fire, natural disaster, or other circumstances beyond your control. Simply being unaware of the requirement is not considered reasonable cause.

Recipient Experience

Recipients use Form 1099-MISC to prepare their tax returns. Independent contractors report Box 7 income on Schedule C and may owe self-employment tax in addition to income tax. The IRS compares what you reported with what recipients claim, and discrepancies can trigger audits or automated notices requesting additional tax.

Record Retention

Keep copies of all Forms 1099-MISC you filed (or have the ability to reconstruct the data) for at least 3 years from the due date. If backup withholding was involved, keep records for 4 years.

State Filing

Many states have their own reporting requirements that mirror federal rules. Check with your state tax authority, as you may need to file copies with state agencies as well. IRS.gov

FAQs

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

It depends on how the LLC is taxed. If the LLC is taxed as a sole proprietorship or partnership, you generally must file Form 1099-MISC (subject to the $600 threshold and other rules). If the LLC is taxed as a corporation (C-corp or S-corp), you generally don't need to file—except for the specific exceptions like attorney fees, medical services, and gross proceeds. The best practice is to request Form W-9 from the LLC, which will indicate its tax classification.

Q2: What if a contractor refuses to provide their Social Security Number or EIN?

If a payee refuses to provide a TIN, you must begin backup withholding at 28% on all future payments. You should still file Form 1099-MISC reporting the payments and the amount withheld in Box 4, even if you don't have the TIN. Enter "REFUSED" in place of the TIN. The payee may face a $50 penalty for failing to provide their TIN.

Q3: I paid someone $500 in June and $300 in November. Do I need to file?

Yes. You combine all payments made to the same person during the calendar year. Since $500 + $300 = $800, which exceeds the $600 threshold, you must file Form 1099-MISC reporting $800.

Q4: Can I e-file Form 1099-MISC, or must I use paper?

You can choose to e-file even if you're not required to. However, if you file 250 or more information returns of any type during the year, you must file electronically. Electronic filing has a later deadline (March 31 vs. February 29 for paper) and is generally faster and more accurate. The IRS FIRE system accepts electronic submissions.

Q5: I hired someone to fix my personal home. Do I need to issue them a Form 1099-MISC?

No. Form 1099-MISC is only required for payments made in the course of your trade or business. Personal payments—even substantial ones—are not reportable. However, if you rent out your home and pay someone for repairs related to the rental business, that would be reportable.

Q6: What's the difference between Box 7 (Nonemployee Compensation) and Box 3 (Other Income)?

Box 7 is for payments for services performed by someone who is not your employee—fees, commissions, and payments to independent contractors. These amounts are generally subject to self-employment tax. Box 3 is for other types of income that don't fit in other boxes, such as prizes, awards, taxable damages, and payments to deceased employees' estates. Box 3 amounts are generally not subject to self-employment tax. Using the wrong box can cause tax problems for recipients.

Q7: I'm a small business owner who received several Forms 1099-MISC. What do I do with them?

Keep them with your tax records. The income shown should match what you report on your tax return (typically Schedule C if you're a sole proprietor). If you received a Form 1099-MISC showing an incorrect amount, contact the issuer immediately to request a corrected form. If you can't resolve the discrepancy before filing your return, report the correct amount on your return and attach an explanation. The IRS will match the forms against your return and may send a notice if there are discrepancies. IRS.gov

Additional Resources

• 2015 Instructions for Form 1099-MISC (IRS.gov)
• 2015 General Instructions for Certain Information Returns (IRS.gov)
• IRS Form 1099-MISC Main Page (IRS.gov)
• IRS Help Line: 1-800-TAX-FORM (1-800-829-3676)

This guide is based on IRS regulations and instructions current for the 2015 tax year. Tax laws change, so always consult the most current IRS guidance or a tax professional for your specific situation.