Form 1099-MISC Tax Year 2013: Complete Filing Checklist
Purpose and Overview
Form 1099-MISC reports miscellaneous income to recipients and the IRS for the tax year 2013. This form includes boxes 15a and 15b for Section 409A nonqualified deferred compensation reporting, which requires careful attention to track current-year deferrals and taxable income from plan failures. Recipients must report these amounts according to specific schedules tied to their employment status and income type.
Key Year-Specific Changes for 2013
Section 409A Reporting Requirements
Boxes 15a and 15b continue to be available for reporting nonqualified deferred compensation under Section 409A. Box 15a is optional and reports compliant deferrals, as well as earnings. Box 15b is required when plan failures occur and reports amounts that become immediately taxable. Box 15b income must also be included in Box 7 and triggers additional tax consequences under Section 409A(a)(1)(B).
Extended Deadline for Specific Payment Types
The recipient deadline has been extended to February 18, 2014 (from January 31, 2014) for forms reporting substitute payments in Box 8 or gross proceeds paid to attorneys in Box 14. All other payment types must be furnished to recipients by January 31, 2014.
Filing Deadlines with the IRS
Paper filers must submit Copy A to the IRS by February 28, 2014. Electronic filers have until March 31, 2014. The instructions explicitly prohibit printing forms from the IRS website for paper filing due to scanning requirements.
Self-Employment Tax Threshold
Recipients with Box 5, Box 7, or combined self-employment income of $400 or more must file a return and complete Schedule SE (Form 1040) to calculate self-employment tax.
Step-by-Step Preparation Checklist
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Step 1: Verify All Identification Numbers
Confirm that the payer’s federal identification number and the recipient’s taxpayer identification number are correct. On Copy B provided to the recipient, only the last four digits of the identification number should be visible. The full number must be reported to the IRS on Copy A. Complete the account number field only if the payer uses a unique identifier to distinguish multiple accounts for the same recipient.
Step 2: Determine Applicable Boxes and Amounts
Identify which boxes apply based on payment types. Report Box 1 for rents from real property, Box 2 for royalties of $10 or more, Box 3 for other income, including prizes and certain damages, Box 5 for fishing boat proceeds, Box 6 for medical and health care payments, Box 7 for nonemployee compensation of $600 or more, and Box 10 for crop insurance proceeds. Leave boxes blank when no payments apply to those categories.
Step 3: Report Nonemployee Compensation Correctly
For Box 7 nonemployee compensation, recipients who are self-employed must report this income on Schedule C (Form 1040) and pay self-employment tax if net earnings are $400 or more. The $600 reporting threshold applies to payers; however, recipients must report all self-employment income, regardless of the amount.
Step 4: Handle Employee Misclassification Disputes
If a recipient believes Box 7 income should have been reported as W-2 wages due to employee misclassification, they should file Form 8919 to calculate their share of uncollected Social Security and Medicare taxes. The recipient reports the amount as wages on Form 1040 line 7, along with Form 8919. The payer is not required to issue a corrected form unless they agree with the reclassification.
Step 5: Complete Box 15a for Compliant Plans (Optional)
Box 15a is optional according to IRS Notice 2008-115. If completing this box, report the total amount deferred during the year (at least $600) under all non-qualified deferred compensation plans that meet Section 409A requirements. Include earnings on both current-year and prior-year deferrals in this total.
Step 6: Complete Box 15b for Plan Failures (Required)
Box 15b must be completed if a non-qualified deferred compensation plan fails to satisfy Section 409A requirements, causing deferrals to become immediately taxable. Enter all amounts deferred, including earnings, that are includible in gross income due to plan failures. Do not include amounts already reported in prior years on previously filed forms or amounts still subject to substantial risk of forfeiture.
Step 7: Duplicate Box 15b Amounts in Box 7
Any amount reported in Box 15b must also be included in Box 7 as nonemployee compensation. This ensures the income is properly reported for both income tax and self-employment tax purposes. The duplication is intentional and required by IRS instructions.
Step 8: Calculate Additional Section 409A Taxes
Recipients with Box 15b income face additional tax consequences beyond ordinary income tax. Section 409A imposes an extra tax equal to 20 percent of the amount included in income, plus a premium interest charge calculated under Section 409A(a)(1)(B)(ii). Recipients report these additional amounts on their Form 1040, following the form instructions.
Step 9: Report Federal Income Tax Withheld
Enter amounts in Box 4 only for backup withholding or federal income tax withheld from Indian gaming profits paid to tribal members. Box 4 is not used for standard withholding on nonemployee compensation. Backup withholding at 28 percent applies when recipients fail to provide a correct taxpayer identification number or when the IRS notifies the payer to begin backup withholding.
Step 10: Handle Attorney Payment Reporting
Report attorney fees of $600 or more paid for legal services in Box 7. Report gross proceeds of $600 or more paid to attorneys in connection with legal services in Box 14, but only if not already reportable in Box 7. The attorney reporting requirements apply whether the attorney is an individual, a partnership, or a corporation. Recipients report Box 14 amounts based on their circumstances, with certain exclusions available for personal injury settlements per Publication 525.
Step 11: Meet the Recipient Furnishing Deadlines
Furnish Copy B to recipients by January 31, 2014, for most payment types. The deadline extends to February 18, 2014, only for forms reporting substitute payments in Box 8 or gross proceeds to attorneys in Box 14. Provide all required copies to recipients, including state copies if applicable.
Step 12: File Copy A with the IRS
Submit Copy A to the IRS by February 28, 2014, if filing on paper. Electronic filers have until March 31, 2014. Do not print Copy A from the IRS website for submission, as official scannable forms are required for paper filing. Order official forms from the IRS or use approved electronic filing methods.
Step 13: Maintain Required Records
Keep copies of all filed Forms 1099-MISC and supporting documentation for at least three years from the filing date. Maintain records that show the dates and amounts of payments, recipient information, and account numbers. These records support the information returns filed and may be requested during IRS examinations.
Recipient Reporting Instructions
Schedule C Reporting for Self-Employment Income
Recipients report Box 7 nonemployee compensation on Schedule C (Form 1040) when the income represents self-employment earnings from a trade or business. This includes fees, commissions, and other compensation for services performed as an independent contractor. Complete Schedule SE to calculate self-employment tax on net earnings of $400 or more.
Other Income Reporting
Report Box 3 other income on Form 1040 according to the type of income received. Prizes and awards generally appear on Schedule 1 (Form 1040) line 8 as other income. Indian gaming profits from Box 3 are also reported as other income. Some amounts may require different treatment based on their nature and applicable tax rules.
Royalty and Rental Income
Report Box 1 rental income on Schedule E (Form 1040) if the rental activity qualifies as a passive activity. Report Box 2 royalties on Schedule E unless the royalty income is from a business activity, in which case, use Schedule C. The classification depends on the level of services provided and the nature of the arrangement.
Medical Payments and Fishing Proceeds
Recipients of Box 6 medical and health care payments report the income on Schedule C if operating a medical practice or providing health care services. Box 5 fishing boat proceeds are self-employment income reportable on Schedule C with self-employment tax calculated on Schedule SE.
Common Filing Errors to Avoid
Incorrect Identification Numbers
Using incorrect or mismatched taxpayer identification numbers causes processing delays and may trigger backup withholding. Verify all numbers against official documentation before filing. Use Form W-9 to request and certify recipient identification numbers.
Missing Required Duplications
Failing to duplicate Box 15b amounts in Box 7 creates reporting inconsistencies. The IRS expects both boxes to reflect Section 409A income, with Box 15b identifying the specific plan failure and Box 7 ensuring proper income and self-employment tax treatment.
Wrong Deadline Application
Using the standard January 31 deadline for Box 8 or Box 14 payments results in late filing. These specific payment types are automatically extended to February 18 without requiring a separate extension request.
Improper Box Selection
Reporting amounts in incorrect boxes causes recipient confusion and potential tax calculation errors. Review the specific instructions for each box type and ensure payments match the intended category. Boxes have different reporting thresholds and recipient reporting requirements.
Special Situations and Exceptions
Payments to Corporations
Most payments to corporations are exempt from Form 1099-MISC reporting requirements. However, exceptions exist for medical and health care expenses in Box 6, attorney fees in Box 7, gross proceeds to attorneys in Box 14, and substitute payments in Box 8. These categories require reporting regardless of the recipient’s corporate status.
Deceased Employee Wages
Wages and accrued compensation paid after an employee’s death follow specific reporting rules. If paid in the year of death, withhold Social Security and Medicare taxes and report only in Boxes 3, 5, and 6 of Form W-2, not in Box 1. Additionally, Form 1099-MISC should include the gross amount in Box 3. If paid after the year of death, report only on Form 1099-MISC in Box 3 without Social Security or Medicare withholding.
Direct Sales of Consumer Products
Check Box 9 when direct sales of consumer products to a buyer for resale total $5,000 or more during the year, and sales occur outside a permanent retail establishment. This checkbox alerts the recipient to potential reporting obligations under direct sales rules. Do not enter a dollar amount in this box.
Penalties and Compliance
Late Filing Penalties
Penalties apply for failure to file correct information returns by the due date. Penalty amounts vary based on the timing of the filing and whether the failure was intentional. Small businesses face lower maximum penalties than large businesses; however, timely and accurate filing remains essential.
Incorrect Information Penalties
Reporting incorrect information, including wrong amounts or identification numbers, may result in penalties. The penalty amount depends on when corrections are made. Corrections made within 30 days of the required filing date carry lower penalties than later corrections.
Failure to Furnish Statements
Separate penalties apply for failing to furnish required statements to recipients by the January 31 or February 18 deadline. Each failure to provide a correct payee statement carries its penalty, and intentional disregard results in higher penalty amounts.
Resources and Additional Guidance
Review the 2013 General Instructions for Certain Information Returns for comprehensive guidance on electronic filing requirements, truncating recipient identification numbers, nominee and middleman reporting, and correction procedures. Publication 15-A provides additional details on worker classification and independent contractor rules. Consult IRS.gov for the latest updates and frequently asked questions about Form 1099-MISC reporting requirements.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
