What Form 1099-MISC (2015) Is For
IRS Form 1099-MISC (2015) is used by businesses to report payments made to nonemployees, such as independent contractors, during the 2015 tax year. The Internal Revenue Service requires this form to track income not reported on a W-2, ensuring that payment recipients correctly include such payments on their tax return and pay taxes owed. Employers and other organizations must report miscellaneous income, including rent, royalty payments, and nonemployee compensation, when the amounts meet the filing threshold.
The IRS Form 1099 Misc 2015 helps confirm that all payments reported during the calendar year are accurately documented for income tax purposes. Each payer must provide valid taxpayer identification numbers or employer identification numbers to ensure proper reporting. Payments made through a payment card or third-party network transactions may also need to be reported by a payment settlement entity using other forms, depending on the nature of the transaction.
When You’d Use Form 1099-MISC
Businesses, payers, and self-employed individuals use Form 1099-MISC to report compensation paid for services performed by nonemployees. A payer must file Form 1099 when total payments reach at least $600 for rents, prizes, or other compensation, or at least $10 for royalty payments. The form is also used to report gross royalties, gas payments, or other services provided by independent contractors or companies within a trade or business.
Each payer should file electronically or by paper using the appropriate form, depending on the number of information returns submitted. Such payments must be reported to the IRS and the payment recipient, using the recipient's accurate taxpayer identification number. Personal expenses are excluded because they are not part of a trade or business. Filing errors or missing valid TINs may result in penalties, backup withholding, or mismatched reporting by the Social Security Administration.
Key Rules or Details for 2015
The 2015 version of Form 1099-MISC required employers and businesses to report payments to independent contractors and other organizations that exceeded the specified limits. The IRS expected each payer to complete the form accurately, using correct taxpayer identification numbers and box entries to report miscellaneous income. Independent contractors, rather than employees, received compensation classified as nonemployee compensation, rather than wages.
Businesses were also required to follow rules for corporate exceptions, backup withholding, and federal income tax reporting. Personal payments were excluded from filing, while certain types of payments to corporations, such as medical services and attorney fees, remained reportable. Late filing or failure to file Form 1099 can result in penalties. Payers are advised to determine eligibility early in the tax year and file Form 1099 electronically for faster processing.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Step-by-Step (High Level)
Filing Form 1099-MISC (2015) requires accurate information, proper classification, and timely submission to the Internal Revenue Service and recipients. Each payer must verify reportable payments, valid taxpayer identification numbers, and compliance with IRS rules before submitting their return.
Step 1: Gather and Review Records
Collect all payment details for the calendar year, including rents, services, and royalty payments. Confirm each payee’s taxpayer identification number or employer identification number and determine which payments meet IRS reporting thresholds.
Step 2: Prepare Official Forms
Use the appropriate IRS Form 1099-MISC 2015, not photocopies, to report payments. Enter the payer’s name, address, and identification number, followed by recipient details and payment amounts in the correct boxes for rents, royalties, or nonemployee compensation.
Step 3: Verify Accuracy
Check all entries for accuracy, including taxpayer identification numbers and payment classifications. Ensure that nonemployee compensation, gross royalties, and other reportable payments are placed in the proper boxes.
Step 4: Distribute Copies
Send Copy A to the Internal Revenue Service with Form 1096 and provide Copy B to the payment recipient. Submit state copies, if required, and retain one for your business records.
Step 5: File Electronically and Retain Records
File electronically through the IRS FIRE system if submitting 250 or more forms, or choose to e-file voluntarily for faster processing. Retain copies of all forms for at least three years, or four years if backup withholding applied, and promptly correct any reporting errors.
Common Mistakes and How to Avoid Them
Errors in filing Form 1099-MISC are common, but they can be easily prevented with proper preparation and attention to detail. The most common mistakes include:
For more information on common business tax problems, see below:
- Reporting payments in the wrong box: Always review box descriptions carefully. For example, rent belongs in Box 1, while services or prizes belong in other designated boxes.
- Submitting forms without a valid taxpayer identification number: Missing or incorrect TINs automatically trigger backup withholding and IRS notices. Verify all identification numbers before filing.
- Assuming all payments to corporations are exempt: Certain corporate expenses, such as legal fees or medical costs, still require reporting. Check IRS exceptions before excluding any payee.
- Confusing Form 1099-MISC with Form 1099-NEC: Use Form 1099-NEC for nonemployee compensation and Form 1099-MISC for rents, royalties, and other income.
- Missing the recipient deadline: Recipients must receive their copies before the IRS filing date. Set reminders to avoid late penalties.
By double-checking details, validating payee information, and confirming deadlines, businesses can ensure accuracy and compliance with IRS information reporting requirements.
What Happens After You File
After the payer files Form 1099-MISC with the Internal Revenue Service, the agency compares payments reported with income reported on the recipient’s tax return to ensure all miscellaneous income is subject to federal income tax. The IRS and Social Security Administration use taxpayer identification numbers to verify compensation paid and detect discrepancies. Each payer should retain copies of forms and payment records for at least three years. Filing electronically helps reduce errors, confirm accuracy, and maintain compliance with information returns and tax reporting requirements.
FAQs
Who must file Form 1099-MISC for the 2015 tax year?
Any business or payer that made $600 or more in rents, services, or nonemployee compensation must file Form 1099-MISC. The Internal Revenue Service uses these information returns to ensure payment recipients properly report income tax.
Are personal payments or gifts reported on Form 1099-MISC?
No, personal payments are not reported because they are unrelated to a trade or business. Only payments made for business services, such as those to an independent contractor, must be reported on the appropriate form for the 2015 tax year.
How are third-party network transactions reported?
A payment settlement entity typically reports payments made through a payment card or third-party network transactions on a separate IRS form. Payers should determine if such payments qualify under Form 1099-MISC or other forms.
What should a payer do if the recipient does not have a valid taxpayer identification number?
If a payee fails to provide a valid taxpayer identification number, the payer must begin backup withholding. The payer should still report payments and withholding amounts on the IRS Form 1099-MISC 2015 to remain compliant with IRS rules.
Can Form 1099-MISC be filed electronically?
Yes, payers can file electronically using the IRS FIRE system, especially when submitting multiple information returns. Filing electronically reduces errors, speeds processing, and ensures payments reported for independent contractors and other compensation are accurately received.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library or see our IRS assistance guide.
