Form 1099-MISC 2016 Checklist
Purpose
Form 1099-MISC reports miscellaneous income to recipients and the IRS, including nonemployee compensation, rents, royalties, and other payments. For 2016, Section 409A nonqualified deferred compensation reporting includes separate Box 15a (deferrals) and Box 15b (taxable income from failed plans) requirements. Box 15b income is subject to substantial additional tax reported on Form 1040.
Filing Steps
Step 1: Verify Identification Numbers
Confirm that the payer’s federal identification number (EIN) and the recipient’s TIN (SSN, ITIN, ATIN, or EIN) are complete and accurate. Copy B furnished to the recipient may display only the last four digits of the SSN for privacy protection.
Step 2: Report Box 7 Nonemployee Compensation Correctly
Report Box 7 only if payments are $600 or more. File Copy A with the IRS by January 31, 2017, if any Box 7 amounts are present, regardless of paper or electronic filing method.
Step 3: Apply Correct Recipient Statement Deadlines
Furnish recipient copies by January 31, 2017, for all boxes except Box 8 (substitute payments instead of dividends or interest) and Box 14 (gross proceeds to attorney), which have an extended deadline of February 15, 2017.
Step 4: Complete Box 15a for Current-Year Deferrals
Enter in Box 15a the current-year deferrals under nonqualified deferred compensation plans subject to Section 409A, plus any earnings on current and prior deferrals. This amount is reported separately and is not duplicated in Box 7.
Step 5: Complete Box 15b for Section 409A Income
Report in Box 15b income from nonqualified deferred compensation plans that fail Section 409A requirements. This amount is not included in Box 7 and triggers substantial additional tax as per the Form 1040 instructions. Box 15b is a separate reporting category.
Step 6: Report Fishing Boat Proceeds Appropriately
Report fishing boat proceeds in Box 5 only if you, as the operator, consider the recipient self-employed. Instruct recipients to report this income on Schedule C (Form 1040) and complete Schedule SE for self-employment tax.
Step 7: Mark Box 9 for Direct Sales
Check Box 9 (checkbox only, no dollar amount required) if direct sales of consumer products to the recipient for resale total at least $5,000. The checkbox indicates the threshold has been met.
Step 8: Populate State and Local Tax Boxes
Complete Boxes 16–18 (state/local tax withheld) only if withholding occurred in a specific state. Identify the state or payer’s state number in Box 17.
Step 9: Mark Corrected Forms Properly
Mark the “CORRECTED” checkbox only when reissuing a previously filed Form 1099-MISC due to an error. File corrected Copy A with the IRS using the same due date rules as the original. Never check the VOID box on corrected forms, as this alerts IRS scanning equipment to ignore the form.
Step 10: Use Proper Forms for Filing
Copy A of Form 1099-MISC cannot be printed from the IRS website for filing with the IRS, as paper forms are scanned during IRS processing and must comply with scanning specifications. However, Copy B and other recipient copies may be downloaded and printed from the IRS website to satisfy recipient statement requirements. Order official Copy A forms from the IRS or use IRS-approved vendor forms.
Step 11: File Electronically or on Paper by Deadline
If filing Copy A electronically, file by March 31, 2017. If filing on paper, file by February 28, 2017 (or January 31, 2017, if Box 7 amounts are present). Electronic filing is required if filing 250 or more forms of the same type.
Step 12: Submit Form 1096 with Paper Returns
Attach Form 1096 (Annual Summary and Transmittal) when filing Copy A on paper with the IRS. Groups are formed by form number and submitted with a separate Form 1096 for each group. Furnish recipient copies (B, 2, and state copy) separately with proper account number identification where applicable.
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.
Year-Specific Changes and Regulatory Updates
Section 409A Reporting Structure
For 2016, Box 15a and Box 15b are separated to distinguish between current-year deferrals plus earnings (Box 15a) and income from failed or non-Section-409A-compliant plans (Box 15b). Box 15b income carries a substantial additional tax penalty on the recipient’s Form 1040 and is not included in Box 7.
Accelerated Filing Deadline
Public Law 114-113, Division Q, Section 201, requires Form 1099-MISC to be filed by January 31, 2017, when reporting nonemployee compensation in Box 7. This accelerated deadline applies to both paper and electronic filing, eliminating the previous extended deadlines for Box 7 reporting.
Backup Withholding Rules
Report backup withholding in Box 4 if the recipient did not furnish a valid TIN. Withholding applies at the rate specified by the IRS when the payer has notice of missing or incorrect identification and applies to certain reportable payments in Boxes 1, 2, 3, 5 (cash portion), 6, 7 (except for fish purchases made in cash), 8, 10, and 14.
FATCA Filing Requirement Checkbox
Check the FATCA filing requirement box if you are reporting to satisfy Chapter 4 account reporting obligations under the Foreign Account Tax Compliance Act. This applies to certain U.S. payers and foreign financial institutions reporting U.S. accounts. Recipients may also be subject to Form 8938 disclosure requirements.
Attorney Extends Due Date
The February 15, 2017, extended due date for recipient statements applies when gross proceeds paid in connection with legal services are reported in Box 14. Recipients must report only the taxable portion as income. This extended deadline also applies to Box 8 (substitute payments).
Privacy Protection for Recipient Copies
For 2016, Form 1099-MISC Copy B and other recipient copies may show only the last four digits of the recipient’s SSN, ITIN, ATIN, or EIN for privacy protection. Copy A filed with the IRS must show the complete TIN.
No ACA Integration
Form 1099-MISC does not interact with Affordable Care Act employer-sponsored health coverage reporting for 2016. There is no integration with shared responsibility payment reporting on Forms 1095-B or 1095-C.
Key Reporting Thresholds
Report payments of $600 or more for rents, services performed by nonemployees, prizes and awards, other income, medical and health care payments, crop insurance proceeds, and fishing boat proceeds. Report royalties or broker payments instead of dividends or tax-exempt interest of $10 or more. Report direct sales of at least $5,000 of consumer products for resale by checking Box 9.
Important Filing Reminders
File all information returns properly addressed and mailed on or before the due date. If the due date falls on a Saturday, Sunday, or legal holiday, file by the next business day. Keep copies of filed information returns or maintain the ability to reconstruct data for at least 3 years from the due date. Request extensions using Form 8809 if needed, which must be filed by the original due date to receive an automatic 30-day extension.
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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.
