Form 1099-MISC: Miscellaneous Income (2023 Tax Year)

What Form 1099-MISC Is For

Form 1099-MISC (Miscellaneous Information) is an IRS tax form used by businesses and individuals to report various types of income payments made during the year—but not payments to regular employees (those go on Form W-2). Think of it as the IRS's way of tracking money that changes hands outside of traditional employment arrangements.

If you run a business or are self-employed and you paid someone for services, rents, prizes, or several other types of payments totaling $600 or more during the year, you'll likely need to file Form 1099-MISC with the IRS and give a copy to the person you paid. The form helps ensure that people report all their income when they file their tax returns.

Key types of payments reported on Form 1099-MISC include:

Rents (for office space, equipment, or land)
Royalties (from patents, copyrights, oil/gas properties)
Other income (prizes, awards, medical research payments)
Medical and healthcare payments (to doctors, therapists, other providers)
Crop insurance proceeds
Fishing boat proceeds
Gross proceeds paid to attorneys (settlements, legal fees)
Substitute payments in lieu of dividends or interest

Important note: Starting in 2020, payments to independent contractors and freelancers for services (what used to be the most common use of Form 1099-MISC) are now reported on Form 1099-NEC instead. Form 1099-MISC now focuses on the other payment types listed above. IRS.gov

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

Original Filing Timeline for 2023: For payments made during the 2023 tax year, you need to file Form 1099-MISC by specific deadlines in early 2024:

Paper filing deadline: February 28, 2024
Electronic filing deadline: March 31, 2024 (if you file 250+ forms electronically)
Recipient copies deadline: January 31, 2024 (for most payment types) or February 15, 2024 (if you only reported payments in boxes 8 or 10)

Filing Late: If you miss the original deadline, you should file as soon as possible to minimize penalties. The IRS imposes escalating penalties based on how late you file:

Within 30 days late: $60 per form (up to $630,500 total; $220,500 for small businesses)
31 days to August 1: $120 per form (up to $1,891,500 total; $630,500 for small businesses)
After August 1 or never filed: $310 per form (up to $3,783,000 total; $1,261,000 for small businesses)

Small businesses (average annual gross receipts of $5 million or less for the most recent 3 years) face lower maximum penalties but the same per-form amounts. IRS.gov

Filing Amended/Corrected Returns: Discovered a mistake after filing? You must file a corrected Form 1099-MISC as soon as possible. Here's how:

For paper corrections: Prepare a new Form 1099-MISC with the correct information, check the "CORRECTED" box at the top, and file it with a new Form 1096 transmittal
For electronic corrections: Use the IRS's electronic filing system (FIRE, IRIS, or IRS Portal) following their correction procedures
Send corrected copies to recipients showing the updated information

Important: Never check the "VOID" box when filing a correction—this tells IRS scanners to skip the form entirely, and your correction won't be processed. Use "CORRECTED" instead. IRS.gov

Key Rules or Details for 2023

Reporting Thresholds

You must file Form 1099-MISC if you paid someone in the course of your trade or business:

$10 or more in royalties OR broker payments in lieu of dividends/tax-exempt interest
$600 or more in rents, prizes/awards, other income, medical/healthcare payments, fishing boat proceeds, crop insurance proceeds, gross proceeds to attorneys, or Section 409A deferrals

Who Must File

Businesses, self-employed individuals, nonprofits, government agencies, and certain trusts/cooperatives must file when they make qualifying payments
Personal payments don't count—you only report payments made in the course of your trade or business
Even nominee/middlemen (people who receive payments on behalf of someone else) must file

Electronic Filing Requirement

For 2023 returns, if you file 250 or more of any single form type (like 250+ Forms 1099-MISC), you must file electronically. (Note: This threshold dropped to 10 forms starting with 2024 tax year returns filed in 2025.) IRS.gov

Exceptions—When You Don't Need to File

Payments to corporations (with important exceptions: you must report medical/healthcare payments, attorney gross proceeds, substitute payments, and cash fish purchases even to corporations)
Payments for merchandise, telephone, freight, storage, and similar items
Payments to tax-exempt organizations, government entities, or foreign governments
Wages to employees (use Form W-2 instead)
Scholarships and fellowships (generally not reported)

Backup Withholding

If a payee doesn't provide a correct Taxpayer Identification Number (TIN) or the IRS notifies you of an incorrect TIN, you must withhold 24% of the payment and report it in Box 4 of Form 1099-MISC—even if the payment is below the normal $600 threshold. IRS.gov

Step-by-Step (High Level)

For Payers

Step 1: Gather Information

Collect the following for each payee:

Full legal name
Complete address
Taxpayer Identification Number (TIN)—either a Social Security Number (SSN) for individuals or Employer Identification Number (EIN) for businesses
Total amount paid in each category
Any federal income tax withheld

Pro tip: Use Form W-9 to collect this information from payees at the start of your business relationship.

Step 2: Determine Which Boxes Apply

Review which type of payment you made and identify the correct box:

Box 1: Rents
Box 2: Royalties ($10+ threshold)
Box 3: Other income
Box 4: Federal income tax withheld (backup withholding)
Box 5: Fishing boat proceeds
Box 6: Medical and healthcare payments
Box 8: Substitute payments in lieu of dividends/interest ($10+ threshold)
Box 9: Crop insurance proceeds
Box 10: Gross proceeds paid to an attorney
Boxes 11–15: Less common specialized payments

Step 3: Complete the Forms

Fill out Copy A for the IRS
Fill out Copy B for the recipient
Enter amounts in the proper boxes—the IRS matches this information with recipient tax returns
Don't forget your payer information (name, address, TIN)

Step 4: File with the IRS

Paper filers: Mail Copy A with Form 1096 (Annual Summary and Transmittal) to the appropriate IRS processing center for your location
Electronic filers: Use the IRS's FIRE system, IRIS portal, or authorized third-party software
Deadline: February 28, 2024 (paper) or March 31, 2024 (electronic) for 2023 tax year

Step 5: Provide Copies to Recipients

Give Copy B to each recipient by January 31, 2024 (or February 15, 2024 if only reporting boxes 8 or 10)
You can mail, hand-deliver, or—with recipient consent—provide electronically

Step 6: Keep Your Records

Retain copies of all filed forms or have the ability to reconstruct the data for at least 3 years from the due date (4 years if you imposed backup withholding). IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Using the Wrong Form

Many people confuse Form 1099-MISC with Form 1099-NEC. Remember: payments for services performed by independent contractors go on 1099-NEC, not 1099-MISC.
How to avoid: Review the payment type carefully. If you paid someone for their work or services, use 1099-NEC. Use 1099-MISC for rents, royalties, prizes, and other non-service payments.

Mistake #2: Incorrect or Missing TINs

Filing with the wrong Social Security Number or EIN is one of the most common errors and triggers IRS penalty notices.
How to avoid: Always collect Form W-9 from payees before making payments. Verify TINs using the IRS's TIN Matching System if available. If a payee refuses to provide their TIN, you must implement backup withholding at 24%.

Mistake #3: Failing to Report Payments to Corporations

While most payments to corporations are exempt from 1099 reporting, there are critical exceptions.
How to avoid: Always report medical/healthcare payments, gross proceeds to attorneys, substitute payments in lieu of dividends/interest, and cash fish purchases—even if paid to a corporation.

Mistake #4: Reporting in the Wrong Box

Putting income in the wrong box causes mismatches when the IRS compares your form to the recipient's tax return.
How to avoid: Carefully read the instructions for each box. When in doubt, consult IRS Publication 1220 or a tax professional. Attorney payments deserve special attention—services go on 1099-NEC Box 1; gross settlement proceeds go on 1099-MISC Box 10.

Mistake #5: Missing Filing Deadlines

Late filing triggers automatic penalties that escalate over time.
How to avoid: Mark your calendar well in advance. Set up electronic filing if you have many forms—it gives you an extra month. If you need more time, file Form 8809 for a 30-day extension (but this doesn't extend the deadline for providing copies to recipients).

Mistake #6: Checking "VOID" Instead of "CORRECTED"

When correcting an error, checking the VOID box causes the IRS scanner to skip the form entirely.
How to avoid: Use the "CORRECTED" checkbox for amendments. Reserve "VOID" only when you're submitting a completely new, replacement form and want the original ignored.

Mistake #7: Including Non-Reportable Personal Payments

The requirement to file only applies to payments made in the course of your trade or business.
How to avoid: If you personally rented a vacation home for your family, don't file a 1099-MISC. If your business rented office space, do file. The key test: was it a business payment?

What Happens After You File

IRS Processing

Once you file, the IRS processes your Form 1099-MISC and adds the information to its master database. The agency will:

Match the amounts you reported with the income recipients report on their tax returns
Cross-check TINs against Social Security Administration and IRS records
Flag discrepancies for potential audits or correction notices

If Everything Matches

You typically won't hear anything from the IRS. The recipient will use the information on their copy to report the income on their tax return (often on Schedule C, Schedule E, or other applicable forms).

If There's a Problem

You may receive an IRS notice such as:

CP2100/CP2100A Notice: Indicates incorrect or missing TINs. You must send a "B notice" to affected payees requesting corrected information and may need to start backup withholding.
Penalty Notice: If you filed late or incorrectly, the IRS will assess penalties (see amounts above). You can request reasonable cause penalty relief if you have a good explanation.

Recipient's Responsibilities

The person who received the payment must:

Report the income on their federal tax return (and state return if applicable)
Pay income tax (and potentially self-employment tax) on the amounts received
Keep their copy of Form 1099-MISC for at least 3 years

If You Need to Make Changes

Even after the IRS processes your return, you can file a corrected Form 1099-MISC if you discover errors. Follow the correction procedures outlined earlier—the sooner you correct mistakes, the lower your potential penalties.

State Requirements

Many states require separate copies of Form 1099-MISC or have their own reporting requirements. Check your state's department of revenue for specific rules. IRS.gov

FAQs

Q1: I paid someone $500 in rent. Do I need to file Form 1099-MISC?

No. The threshold for reporting rent is $600 or more during the tax year. However, keep good records in case you make additional payments that push the total over $600.

Q2: Can I file Form 1099-MISC electronically even if I have fewer than 250 forms?

Yes! While electronic filing is only mandatory at 250+ forms for 2023, you can voluntarily e-file any number of forms using the IRS's IRIS portal, FIRE system, or approved software. Electronic filing gives you until March 31 instead of February 28 and reduces errors.

Q3: I hired a freelance designer through an LLC. Do I use Form 1099-MISC or 1099-NEC?

Use Form 1099-NEC, not 1099-MISC. Payments for services (design work) go on 1099-NEC. Form 1099-MISC is for rents, royalties, prizes, and other non-service payments. Also verify whether the LLC is taxed as a corporation—if so, you generally don't need to file any 1099 (though there are exceptions).

Q4: The payee gave me a Form W-9 showing they're a corporation. Do I still need to report attorney fees?

Yes. Even though most payments to corporations are exempt from 1099 reporting, attorney fees and gross proceeds are major exceptions. You must report payments to attorneys (for services) on Form 1099-NEC Box 1, and gross proceeds paid to attorneys on Form 1099-MISC Box 10—regardless of corporate status.

Q5: I forgot to file Form 1099-MISC by the February deadline. What should I do?

File immediately. The IRS penalty increases the longer you wait: $60 per form if you file within 30 days late, $120 if you file between 31 days and August 1, and $310 if you file after August 1. The sooner you file, the lower the penalty. If you have a legitimate reason for the delay (serious illness, natural disaster), you can request penalty relief by explaining the reasonable cause when you receive a penalty notice.

Q6: Do I need to report the $800 medical bill I paid for my child's doctor visit?

No. Form 1099-MISC reporting only applies to payments made in the course of your trade or business. Personal payments—even large ones—are never reportable on information returns like Form 1099-MISC. If you're a business owner who paid a healthcare provider for a workplace health screening or workers' compensation-related medical services, then you would need to report it.

Q7: What's the difference between Box 3 (Other Income) and Box 1 on Form 1099-NEC?

This is a critical distinction! Box 3 on Form 1099-MISC reports prizes, awards, and other miscellaneous income that's not for services performed. Form 1099-NEC Box 1 reports nonemployee compensation—payments for services and work performed. For example: a $1,000 sweepstakes prize goes in 1099-MISC Box 3; $1,000 paid to a freelance writer for an article goes on 1099-NEC Box 1. The difference matters because NEC payments are subject to self-employment tax, while many Box 3 payments are not.

For More Information:

About Form 1099-MISC (IRS.gov)
Instructions for Forms 1099-MISC and 1099-NEC (IRS.gov)
General Instructions for Certain Information Returns (IRS.gov)

This summary is based on IRS guidance current as of the 2023 tax year. Tax laws change periodically, so always verify current requirements at IRS.gov or consult a qualified tax professional for your specific situation.

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Checklist for Form 1099-MISC: Miscellaneous Income (2023 Tax Year)