Form 1099-MISC Miscellaneous Income: A Complete Guide for 2025

What the Form Is For

Form 1099-MISC (Miscellaneous Information) is an IRS tax form that businesses use to report various types of payments made to individuals, partnerships, and certain other entities during the year. Think of it as a receipt that tells both the IRS and the recipient about money that was paid—and that money is likely taxable income for the person who received it.

The form covers a wide variety of payment types that don't fit into other 1099 categories. You'll use it to report rents paid for office space or equipment, royalties from intellectual property, prizes and awards, payments to attorneys (with special rules), medical and health care payments, crop insurance proceeds, and several other miscellaneous income types. Importantly, Form 1099-MISC is different from Form 1099-NEC, which specifically reports nonemployee compensation (like payments to independent contractors). The IRS separated these forms in recent years to streamline reporting. IRS.gov

You must file Form 1099-MISC if, during 2025, you paid at least $600 in rents, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash for fish purchases, fishing boat proceeds, payments to attorneys, or gross proceeds paid to an attorney in connection with legal services. You'll also need to file if you paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest. Additionally, if you made direct sales of at least $5,000 of consumer products to a buyer for resale (think multi-level marketing), you need to report it on either Form 1099-MISC or Form 1099-NEC. IRS.gov

Generally, you only need to file Form 1099-MISC for payments made in the course of your trade or business—personal payments don't need to be reported. Most payments to corporations are exempt from 1099-MISC reporting, but there are important exceptions: you must report medical and health care payments, substitute payments in lieu of dividends or interest, gross proceeds paid to attorneys, and cash payments for fish purchases, even when paid to corporations.

When You’d Use It (Late/Amended Filings)

Understanding filing deadlines is crucial to avoid penalties. For the 2025 tax year (payments made during calendar year 2025), you must file Form 1099-MISC with the IRS by February 28, 2026 if filing on paper, or March 31, 2026 if filing electronically. You must also furnish a copy to the recipient by January 31, 2026. However, there's a special exception: if you're only reporting amounts in Box 8 (substitute payments) or Box 10 (gross proceeds paid to an attorney), the deadline for furnishing recipient copies extends to February 17, 2026. IRS.gov

What if you missed the deadline or discovered an error after filing? You'll need to file a corrected return. To file a correction, prepare a new Form 1099-MISC with the correct information, check the "CORRECTED" box at the top of the form, and make sure all other information (including the recipient's name and taxpayer identification number) matches the original form exactly. You must also send a corrected copy to the recipient. Don't check the "VOID" box when filing a correction—that box is only for completely canceling a form that should never have been filed. If you need to void a return entirely, file it with the VOID box checked and all the original information still visible. IRS.gov

If you need more time to file, you can request an automatic 30-day extension by submitting Form 8809 (Application for Extension of Time to File Information Returns) before the original due date. You can also request an additional 30-day extension if needed, but you must show good cause. For corrected forms specifically, there's no special extension process—you should file them as soon as you discover the error. Keep in mind that late filing can result in penalties ranging from $60 to $310 per form (as of 2025), depending on how late you file, with special lower limits for small businesses. IRS.gov

Key Rules and Changes for 2025

Electronic filing threshold lowered to 10 returns

Several important rules govern Form 1099-MISC reporting for 2025, including a major change that affects many filers. The biggest news: the e-filing threshold has been lowered to just 10 returns. Previously, you only had to file electronically if you submitted 250 or more information returns, but as of January 1, 2024, if you file 10 or more of any combination of information returns (1099s, W-2s, etc.), you must e-file. This change, authorized by the Taxpayer First Act of 2019, significantly expands the number of businesses required to use electronic filing. IRS.gov

Update: excess golden parachute payments

Another update for 2025: excess golden parachute payments (certain large severance payments to executives) are no longer reported on Form 1099-MISC. These payments are now reported on Form 1099-NEC, Box 3. This streamlines reporting for businesses making these specialized payments. IRS.gov

Box-specific rules and thresholds

Several boxes on Form 1099-MISC have specific reporting thresholds and rules. Box 1 (Rents) includes payments for office space, equipment rentals, and pasture rentals—but with an important exception: if you pay rent to a real estate agent or property manager, you don't report it; they're responsible for reporting the rent they pass along to the property owner. Box 2 (Royalties) covers payments from oil, gas, minerals, patents, copyrights, and similar properties, with a $10 minimum threshold. Box 3 (Other Income) is the catch-all for miscellaneous payments that don't fit elsewhere, including prizes, awards, medical research study payments, and termination payments to former insurance salespeople under specific conditions. IRS.gov

Attorney payments (fees vs. gross proceeds)

Attorney payments deserve special attention because they have unique rules. Attorneys' fees of $600 or more for their services go on Form 1099-NEC (not 1099-MISC), but gross proceeds paid to an attorney in connection with legal services—such as settlement payments where the attorney isn't providing services directly to you—get reported in Box 10 of Form 1099-MISC. This distinction is critical: if an insurance company pays $100,000 to settle a claim and the payment goes to the claimant's attorney, the insurance company reports it in Box 10 as gross proceeds. The exemption for payments to corporations doesn't apply to attorney payments—you must report them regardless of business structure. IRS.gov

Backup withholding requirement

Backup withholding is another key rule to understand. If a payee doesn't provide you with a correct taxpayer identification number (TIN), or if the IRS notifies you that the payee provided an incorrect TIN, you may be required to withhold 24% of the payment and report it in Box 4 (Federal Income Tax Withheld). Even if the payment amount falls below the normal reporting threshold, you must still file Form 1099-MISC if you backup withheld on the payment.

Step-by-Step (High Level)

Step 1: Collect recipient information throughout the year.

Before you make any reportable payment, obtain Form W-9 (Request for Taxpayer Identification Number and Certification) from each payee. This form provides their legal name, business name (if applicable), address, and taxpayer identification number (TIN)—either a Social Security Number or Employer Identification Number. Keeping organized records throughout 2025 makes year-end reporting significantly easier.

Step 2: Determine which payments require reporting.

Review all payments made during 2025 and identify those that meet the reporting thresholds and categories. Remember that different boxes have different thresholds ($600 for most categories, $10 for royalties), and some payments are specifically exempt from reporting even if they exceed these amounts.

Step 3: Obtain the correct forms.

If you're filing electronically (required if you have 10 or more returns), you'll register with the IRS FIRE system or use the newer IRIS (Information Reporting Intake System) portal, which is free. For paper filing (fewer than 10 returns), order official IRS scannable Copy A forms—you cannot print Copy A from the IRS website because it requires special red-ink formatting that scanners can read. You can print Copies B, 1, and 2 (for recipients and your records) from IRS.gov. You'll also need Form 1096 (Annual Summary and Transmittal) if filing on paper.

Step 4: Complete the forms.

For each recipient, fill out a separate Form 1099-MISC. Enter your information (the payer) in the top section, the recipient's information in the middle section, and the payment amounts in the appropriate boxes. Double-check that TINs are formatted correctly (SSNs as XXX-XX-XXXX, EINs as XX-XXXXXXX). If you're filing electronically, the software will guide you through the fields.

Step 5: File with the IRS.

Paper filers must send Copy A of all Forms 1099-MISC along with Form 1096 to the IRS Submission Processing Center by February 28, 2026. Electronic filers submit through their chosen e-file system by March 31, 2026. Keep Copy C for your records.

Step 6: Furnish statements to recipients.

Provide Copy B to each recipient by January 31, 2026 (or February 17, 2026 if only reporting amounts in boxes 8 or 10). Recipients need this information to prepare their own tax returns. You can furnish statements electronically if the recipient consents.

Throughout this process, accuracy is paramount. The IRS matches the information you report with the recipient's tax return, so any discrepancies can trigger inquiries or penalties for both parties.

Common Mistakes and How to Avoid Them

Using the wrong form.

The most common error is confusing Form 1099-MISC with Form 1099-NEC. If you're paying independent contractors for their services, that goes on Form 1099-NEC, not 1099-MISC. Form 1099-MISC is for rents, royalties, prizes, and the other specific categories listed earlier. Using the wrong form means the IRS can't properly match the income, potentially triggering penalties. Solution: Review the category descriptions carefully before selecting which form to use.

Incorrect or missing taxpayer identification numbers.

Failing to collect a TIN before making payments, or reporting an incorrect TIN, is extremely common. When the IRS can't match the TIN to the recipient's name in their database, they'll send you a notice and may require backup withholding on future payments. Solution: Always collect Form W-9 before making the first payment, and consider using the IRS TIN Matching program to verify TINs before filing.

Reporting payments to corporations that are exempt.

While most payments to corporations don't require Form 1099-MISC, many businesses over-report by including payments that fall under the corporate exemption. Remember, you still must report medical and health care payments, attorney payments, substitute payments in lieu of dividends, and fish purchases even when made to corporations—but general services or rent to a corporation generally don't require reporting. Solution: Verify whether your payment falls into one of the exception categories before filing.

Misreporting attorney payments.

The two-tier system for attorney payments trips up many filers. Attorneys' fees for legal services they perform should go on Form 1099-NEC Box 1, while gross proceeds paid to an attorney (like settlement payments) belong on Form 1099-MISC Box 10. Putting them in the wrong place causes confusion for both the attorney and the IRS. Solution: Ask yourself whether the payment is for the attorney's services to you (1099-NEC) or a pass-through payment in connection with legal services (1099-MISC Box 10).

Missing the January 31 recipient deadline.

Many businesses focus on the February 28 or March 31 IRS filing deadlines and forget that recipients must receive their copies by January 31 (with limited exceptions). Recipients need this information to file their own returns accurately and on time. Late recipient statements can result in separate penalties. Solution: Set a reminder for mid-January to prepare and mail or electronically deliver all recipient copies, allowing time for postal delays.

Not filing corrected returns when errors are discovered.

Some businesses discover errors after filing but hope the IRS won't notice, or they don't realize they can file corrections. Failing to correct known errors leaves both parties with mismatched records and can trigger IRS inquiries. Solution: As soon as you discover an error, file a corrected Form 1099-MISC with the "CORRECTED" box checked and send an updated copy to the recipient with an explanation.

Including state sales taxes incorrectly.

The rules around sales taxes can be confusing. If state or local sales taxes are imposed on the service provider and you pay them, they should be included in the reported amount. But if the taxes are imposed on you (the buyer) and you separately pay them, don't include them on the form. Solution: Review your invoices to determine who is legally liable for the sales tax before calculating the reportable amount.

What Happens After You File

IRS processing and matching

Once you've filed Form 1099-MISC with the IRS and furnished copies to recipients, several things occur behind the scenes. Understanding this process helps you know what to expect and how to respond if issues arise.

IRS processing and matching. The IRS receives your Forms 1099-MISC and enters the information into their computer systems. They then match the amounts you reported with what recipients report on their individual or business tax returns. This matching process typically occurs months after the initial filing, so don't expect immediate feedback. If everything matches correctly, you likely won't hear anything—no news is good news when it comes to information return filing.

Recipient obligations

The recipients of your Form 1099-MISC must report the income on their tax returns. Amounts in Box 1 (Rents) typically appear as rental income, Box 2 (Royalties) as royalty income, and Box 3 (Other Income) generally on the "Other income" line of Schedule 1. The recipient may owe income tax and, in some cases, self-employment tax on these amounts. They'll use your form to prepare their return, so accuracy in your reporting directly affects their tax compliance.

Potential IRS notices

If the IRS finds discrepancies between what you reported and what the recipient reported, you may receive a notice. Common notices include CP2100 or CP2100A, which inform you of TIN/name mismatches. When you receive one of these notices, review the information carefully, contact the recipient to obtain correct information, and implement backup withholding if required for future payments. If you filed with incorrect information, prepare and submit a corrected Form 1099-MISC.

Penalty assessments

If you filed late, made errors, or failed to file entirely, the IRS may assess penalties. For 2025, penalties range from $60 per form (if filed within 30 days of the deadline) to $310 per form (filed more than August 1 or not filed at all). Small businesses with average annual gross receipts of $5 million or less in the three most recent tax years face lower maximum penalties. Intentional disregard of filing requirements carries even steeper penalties—$630 per form with no maximum limit. However, if you can show reasonable cause for the failure and didn't willfully neglect your obligations, you may qualify for penalty relief.

Document retention

Keep copies of all Forms 1099-MISC you filed for at least four years. These records protect you if questions arise during an audit and demonstrate compliance with reporting requirements. Also retain the Forms W-9 you collected, payment records, and any correspondence related to the forms.

Recipient disputes

Occasionally, a recipient may contact you claiming they didn't receive the payment amount shown, or that the form is incorrect. Take these claims seriously. Review your records, and if you find an error, file a corrected form promptly. If your records are accurate, provide copies of supporting documentation to the recipient. Good communication prevents confusion and helps maintain positive business relationships.

FAQs

Q1: Do I need to file Form 1099-MISC for payments made to my regular employee?

No. Payments to employees for wages, salaries, and employee benefits are reported on Form W-2, not Form 1099-MISC. However, there are special circumstances where you might report certain payments to former employees. For example, if an employee dies during the year and you pay accrued wages or vacation pay after the date of death, you report these payments on both Form W-2 (for Social Security and Medicare purposes if paid in the year of death) and Form 1099-MISC Box 3. IRS.gov

Q2: I paid rent to a property management company. Who gets the 1099-MISC—the management company or the property owner?

You issue the Form 1099-MISC to the property management company or real estate agent to whom you directly made the rent payment. That entity is then responsible for issuing a separate Form 1099-MISC to the property owner showing the rent paid over to them (minus any management fees). You don't have a reporting obligation directly to the property owner. IRS.gov

Q3: I discovered an error on a Form 1099-MISC I already filed. What do I do?

File a corrected Form 1099-MISC as soon as possible. Complete a new form with the correct information, check the "CORRECTED" box at the top, and ensure all other identifying information (name, address, TIN) matches the original exactly. File it with the IRS using the same method you used for the original (paper or electronic), and send a copy to the recipient with an explanation of the correction. Don't check the VOID box—that's only for forms that should never have been filed at all. IRS.gov

Q4: Can I file just one Form 1099-MISC if I made multiple types of payments to the same person?

Yes. If you paid the same recipient amounts that go in different boxes of Form 1099-MISC (for example, both rent and royalties), you can report all those amounts on a single form. Simply fill in each applicable box with the corresponding amount. This consolidation makes filing more efficient and reduces paperwork for both you and the recipient.

Q5: I made a payment of $550. Do I still need to issue a Form 1099-MISC?

For most payment categories reported on Form 1099-MISC, the threshold is $600, so a $550 payment wouldn't require reporting (unless it's royalties or broker payments in lieu of dividends, which have a $10 threshold). However, there's one important exception: if you backup withheld on the payment, you must file Form 1099-MISC regardless of the payment amount. Also, if you make additional payments to the same recipient later in the year and the total reaches or exceeds $600, you'll need to report the combined amount. IRS.gov

Q6: The person I paid won't give me their taxpayer identification number. What should I do?

When a payee refuses to provide a TIN or the IRS notifies you that the TIN you have is incorrect, you're required to begin backup withholding at 24% on all future payments. You must still file Form 1099-MISC using whatever TIN information you have (even if it's blank or you believe it's incorrect), and report the backup withholding amount in Box 4. The payee may be subject to penalties for failing to provide a correct TIN. Document your attempts to obtain the TIN in case of future questions. IRS.gov

Q7: I'm a small business that files fewer than 10 information returns. Can I still e-file voluntarily?

Yes. While the requirement to e-file only applies if you file 10 or more returns, the IRS encourages voluntary e-filing for any number of returns. The IRIS (Information Reporting Intake System) is a free online portal available to all businesses regardless of filing volume. E-filing offers faster processing, immediate confirmation of receipt, fewer errors due to built-in validation checks, and no need to order special red-ink forms. Many businesses find it more convenient than paper filing even when not required. IRS.gov

Sources

IRS Form 1099-MISC Information
Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
General Instructions for Certain Information Returns (2025)

This guide is for informational purposes only and reflects the requirements for tax year 2025. For specific situations, consult a tax professional or refer to the official IRS instructions.

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