What Form 1099-MISC (2017) Is For
IRS Form 1099-MISC (2017) is used by the Internal Revenue Service to report payments made to individuals, companies, or independent contractors who are not employees. It applies when a business or payer provides compensation of $600 or more in a calendar year for rent, services, or other forms of compensation. This form also covers royalty payments of $10 or more, ensuring that all income is accurately reported for tax purposes.
Employers, government agencies, and financial institutions use this form to file information returns for payments made to each payment recipient. Each recipient must provide a valid taxpayer identification number before receiving payment. If a recipient fails to provide this, the payer must apply backup withholding and report it to the IRS and the Social Security Administration.
When You’d Use Form 1099-MISC
Businesses must file this form when they pay someone for work or services who is not on their payroll as an employee. It applies to self-employed professionals, freelancers, and contractors providing other services. The form helps companies report payments to the IRS, ensuring that compensation paid to each person or company is accurately recorded.
Form 1099-MISC is also used to report gross royalties, rents, and other compensation for the 2017 tax year. Filers must ensure every form is complete and reviewed before submission. The payer is responsible for reporting, filing, and complying with the law to avoid penalties or errors during the filing process.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Key Rules or Details for 2017
For 2017, Form 1099-MISC required businesses to report payments of $600 or more and royalty payments of $10 or more. All information returns had to be filed by January 31, 2018, for nonemployee compensation, or by February 28 (paper) and April 2 (online) for other types of payments. The Internal Revenue Service required each filer to obtain a valid taxpayer identification number to report payments properly.
Exceptions applied to payments made via credit cards or processors, which were reported on Form 1099-K. Filers needed to determine which rules applied based on the type of payment and verify all forms before submission. Failure to file, provide a valid TIN, or report correctly could result in penalties, interest, or additional costs under federal revenue law.
Step-by-Step (High Level)
The process for filing Form 1099-MISC for the 2017 tax year involves several key steps.
Step 1: Collect Information
Obtain a completed Form W-9 from each contractor, vendor, or other payment recipient before issuing payments. Verify that the taxpayer identification number is correct.
Step 2: Track Payments Throughout the Year
Record total payments for each recipient, including rent, royalties, or other services.
Step 3: Determine Which Boxes Apply
- Box 1: Rents
- Box 2: Royalties
- Box 3: Other income
- Box 6: Medical and health care payments
- Box 7: Nonemployee compensation
Step 4: Prepare Copies
Prepare Copy A for the IRS, Copy B for the recipient, and Copy C for your records.
Step 5: File with the IRS
Submit Copy A with Form 1096 if filing on paper. Businesses filing online should use the FIRE System to transmit their forms electronically.
Step 6: Provide Copies to Recipients
Send Copy B by January 31, 2018, or February 15, 2018, for forms that include Boxes 8 or 14. Businesses may request a 30-day filing extension using Form 8809 before the due date. Additional extensions may be available under hardship conditions.
Common Mistakes and How to Avoid Them
- Incorrect taxpayer identification numbers: Always obtain and verify each recipient’s TIN using Form W-9 before making payments to prevent backup withholding and IRS penalties.
- Misclassified workers: Do not issue Form 1099-MISC to employees. Use Form W-2 for wages to ensure proper employment tax reporting and avoid reclassification penalties.
- Incorrect payment reporting: Report compensation for independent contractors in the correct box and confirm that amounts match accounting records before submission.
- Late filing: File all forms by the required deadline to prevent escalating late-filing penalties from the IRS.
- Incomplete review: Verify all totals, TINs, and recipient information before filing to ensure accuracy and avoid costly corrections.
For more information about business tax problems, including tips for preventing mistakes and steps to take if you encounter issues, visit this helpful resource.
Failing to report payments or submitting forms with incorrect or incomplete data can result in penalties for each form submitted to the IRS. Reviewing all records thoroughly before submission helps maintain compliance and reduces the risk of fines or rejected filings.
What Happens After You File
Once the form is filed, the Internal Revenue Service uses the data to verify that all income reported by payment recipients matches the income reported on their tax return. The Social Security Administration and other government agencies also utilize these records for reporting and compliance purposes. If a discrepancy occurs, the IRS may issue a notice to both the payer and the recipient to correct the information.
If corrections are necessary, the filer must complete an amended return and refile with accurate taxpayer identification numbers and payment details. Businesses should retain copies of filed forms for a minimum of three years to comply with Treasury regulations. Proper filing helps companies avoid penalties, ensure accuracy, and maintain good standing with both the IRS and their customers.
FAQs
Who is required to file IRS Form 1099-MISC (2017)?
Employers, businesses, and government agencies must file IRS Form 1099-MISC (2017) to report payments of $600 or more made during the calendar year for rents, services, or other compensation paid to an independent contractor or payment recipient.
What should a payer do if a taxpayer identification number is missing?
If a valid taxpayer identification number is not obtained from the recipient, the payer must begin backup withholding and report payments to the Internal Revenue Service. Failure to comply can result in penalties and additional costs for the business or company.
Are royalty payments and other compensation subject to reporting?
Yes, all royalty payments of $10 or more, as well as other compensation exceeding $600, must be reported using Form 1099-MISC. These payments are subject to income tax laws and help ensure compliance with Internal Revenue Service reporting requirements.
Can a self-employed person or independent contractor receive this form?
A self-employed person, freelancer, or independent contractor who provides services to a company must receive a 1099-MISC if total compensation paid during the calendar year reaches $600 or more. The payer must file this form to report income properly.
What role do financial institutions and government agencies play?
Financial institutions and government agencies are required to report payments, rents, and other services using Form 1099-MISC. They help the Internal Revenue Service verify income, interest, and compensation paid to individuals, ensuring accuracy in taxpayer identification numbers.
What happens after filing Form 1099-MISC with the IRS?
After filing, the Internal Revenue Service and the Social Security Administration review the information returns to confirm that income and payments reported by businesses match those claimed on each tax return. Discrepancies can lead to account reviews or penalties.
Where can companies and recipients find official instructions?
Companies, employers, and recipients can obtain official guidance for IRS Form 1099-MISC (2017) on the Internal Revenue Service website. The site provides detailed instructions about information returns, filing requirements, exceptions, valid TIN verification, and reporting processes for compliance.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library or see our IRS assistance guide.
