IRS Form 1099-MISC (2013): Miscellaneous Income

What IRS Form 1099-MISC (2013) Is For

IRS Form 1099-MISC (2013) is a federal information return used to report miscellaneous income paid to independent contractors, freelancers, and other nonemployees during the 2013 tax year. It serves as a tax statement that allows the IRS to track income not reported on a wage and tax statement, such as Form W-2. Businesses, employers, and other organizations use this form to report payments for personal services, rents, royalties, or other compensation paid to individuals who are not on their payroll during the calendar year. 

When You’d Use IRS Form 1099-MISC (2013)

You would use IRS Form 1099-MISC (2013) to report specific categories of payments made in the course of business during the 2013 tax year.

• Payments of $600 or more for services: You must report all payments totaling $600 or more made to independent contractors or self-employed individuals for services performed as part of your trade or business.
  
  
• Royalty payments: You must report any royalty payments of $10 or more made to a recipient during the calendar year.
  
  
• Rents and leases: You must report rent payments made for office space, equipment, land, or other property used for business purposes.
  
  
• Attorney and healthcare payments: You must report all payments made to attorneys or healthcare service providers, even when those entities operate as corporations.
  
  
• Direct sales and other payments: You must report direct sales of consumer products and any other qualifying business-related payments that are not included on a wage and tax statement.

Key Rules or Details for the 2013 Tax Year

Understanding the filing requirements for IRS Form 1099-MISC (2013) helps ensure compliance and prevents unnecessary penalties.

1. $600 Threshold Rule: You must file the form if you paid $600 or more during the tax year to a person or entity for services performed in your trade or business.
   
   
2. Corporation Exception with Conditions: You generally do not need to file for payments made to corporations, except when reporting attorney fees, medical services, or other specific types of compensation.
   
   
3. Taxpayer Identification Requirement: You must collect a valid Taxpayer Identification Number (TIN) from each payee using Form W-9 before issuing any payment.
   
   
4. Electronic Filing Requirement: You must file electronically if you are submitting 250 or more forms unless you have an approved waiver.
   
   
5. Backup Withholding Rules: You must withhold 28 percent of the payment if the payee does not provide a correct TIN or if the IRS notifies you of a mismatch. 

If you are penalized for mistakes or late filings, IRS penalty abatement may offer relief by reducing or removing penalties in qualifying situations.

Step-by-Step (High Level)

These steps outline how to complete and file IRS Form 1099-MISC (2013) correctly.

1. Gather Information: You must obtain Form W-9 from each payee to collect their name, address, and taxpayer identification number before making any payments.
   
   
2. Identify Reportable Payments: You must review all payments made during the previous tax year and determine which ones meet the reporting criteria, including rents, royalties, and other services.
   
   
3. Obtain Official Forms: You must use official IRS-issued forms and avoid photocopies, as the IRS scanning system cannot process photocopies.
   
   
4. Complete the Form: You must accurately enter all payer and recipient details and record each payment in the proper boxes, including rents, royalties, and nonemployee compensation.
   
   
5. Submit Form 1096: You must attach Form 1096 when mailing paper forms to the IRS to summarize the total number and dollar amount of all 1099-MISC forms filed.
   
   
6. File Electronically if Required: You must use the IRS FIRE system to e-file when you meet the electronic filing threshold or choose to file digitally for efficiency.
   
   
7. Provide Copies to Recipients: You must furnish each recipient with their copy of the form by the required deadline so they can report the income on their tax return.
   
   
8. Keep Records: You must retain copies of all filed forms and related records for at least three years in case of an IRS audit or verification.

If you want assistance communicating with the IRS about your filings, you can grant Power of Attorney authorization to a trusted tax professional.

Common Mistakes and How to Avoid Them

Mistakes on IRS Form 1099-MISC (2013) can lead to penalties or IRS notices, but they can be prevented by applying correct procedures.

• Missing Corporation Exceptions: Many businesses fail to report attorney or healthcare payments to incorporated entities; always confirm whether a payment qualifies under the exceptions before filing.
  
  
• Incorrect or Missing TINs: You must verify each payee’s Taxpayer Identification Number using Form W-9 to prevent mismatches and backup withholding errors.
  
  
• Wrong Box for Income: You must ensure that nonemployee compensation is listed in Box 7 and that other income is reported in Box 3 to maintain IRS accuracy when matching records.
  
  
• Duplicate Filing: You must not resubmit forms that have already been filed; only submit additional or corrected forms when an error has occurred.
  
  
• Paper Form Formatting Errors: You must type all entries clearly on official IRS forms and avoid handwritten or photocopied submissions to ensure the form is readable by IRS systems.

Addressing any unfiled individual tax returns is essential to avoid IRS scrutiny and penalties alongside your current 1099-MISC filing.

What Happens After You File IRS Form 1099-MISC (2013)

After you file IRS Form 1099-MISC (2013), the IRS compares the data you reported with the recipient’s income tax return to ensure accuracy. Recipients use the information you provided to report wages, rents, royalties, or other forms of nonemployee compensation as part of their income. If discrepancies or incorrect taxpayer details are found, the IRS may issue a notice requiring corrections or additional documentation. 

If you owe taxes after reporting miscellaneous income, our IRS payment plan options can help you manage your balance efficiently.

FAQs

How does IRS Form 1099-MISC (2013) affect my income tax return?

Form 1099-MISC (2013) reports miscellaneous income you received during the tax year. You must include this income on your federal income tax return to ensure accurate reporting and avoid penalties for underreporting or omission of taxable income.

Do I need to report direct sales on IRS Form 1099-MISC (2013)?

Yes, if you made $5,000 or more in direct sales of consumer products for resale, you must report those payments on Form 1099-MISC. The amount should reflect qualifying transactions made during the 2013 tax year.

Are third-party network transactions reported on IRS Form 1099-MISC (2013)?

No, third-party network transactions and payment card transactions are generally reported on Form 1099-K by the payment settlement entity. You should not duplicate this reporting on Form 1099-MISC.

Is tax-exempt interest reported on IRS Form 1099-MISC (2013)?

No, tax-exempt interest is not reported on Form 1099-MISC. It is reported instead on Form 1099-INT, which is designed explicitly for interest income that is not subject to federal income tax.

Should I consult a tax professional before filing IRS Form 1099-MISC (2013)?

Yes, a tax professional can ensure that you meet all IRS requirements, understand the rules for backup withholding, and avoid filing errors. Professional advice is critical if your business made multiple types of reportable payments.

‍