Form 1099-MISC 2018 Tax Year Filing Checklist
Purpose and Overview
Form 1099-MISC reports miscellaneous income to the IRS and recipients for the 2018 tax year. The 2018 version introduces Section 409A reporting in boxes 15a and 15b to separately track compliant nonqualified deferred compensation deferrals and noncompliant plan income subject to additional tax. Medical and healthcare payments remain reportable in Box 6. Payers reporting box 7 nonemployee compensation must file by January 31, 2019. All other payers file by February 28, 2019, for paper filings, or April 1, 2019, for electronic filings. Recipients report box 7 amounts on Schedule C or use Form 8919 if they dispute their classification as independent contractors.
Payer Filing Steps
Step 1: Verify Taxpayer Identification Numbers
Confirm that both your Employer Identification Number and the recipient’s Taxpayer Identification Number are accurate and match IRS records. The 2018 form displays only the last four digits of the recipient’s TIN on copies provided to recipients for privacy protection. You must report the complete TIN to the IRS on Copy A.
Step 2: Determine Mandatory Reporting Thresholds
Report payments that meet or exceed these mandatory thresholds: Box 1 (rents) at $600 or more; Box 2 (royalties) at $10 or more; Box 3 (other income) at $600 or more; Box 5 (fishing boat proceeds) for any amount; Box 6 (medical and health care payments) at $600 or more; Box 7 (nonemployee compensation) at $600 or more; Box 10 (crop insurance proceeds) at $600 or more; Box 13 (excess golden parachute payments) for any amount; Box 14 (gross proceeds paid to attorney) at $600 or more total.
Step 3: Report Section 409A Deferrals Correctly
Box 15a is optional. If you choose to complete it, report total amounts deferred during the year (at least $600) under compliant nonqualified deferred compensation plans subject to section 409A requirements, including earnings on current and prior year deferrals. Do not report current-year deferrals that fail section 409A requirements in box 15a.
Step 4: Report Section 409A Noncompliant Income
Box 15b is mandatory when applicable. Report all amounts deferred, including earnings, that are includible in income under section 409A because the nonqualified deferred compensation plan fails to satisfy section 409A structural or operational requirements. When the recipient is a nonemployee, also include Box 15b amounts in Box 7, Nonemployee Compensation. Notify recipients that box 15b income triggers substantial additional tax under section 409A(a)(1)(B).
Step 5: Report Backup Withholding
Report backup withholding in box 4 if the recipient failed to furnish a valid TIN on Form W-9 or falls under specific backup withholding circumstances. Also report Indian gaming profit withholding in box 4. Do not reduce the reported income amount by the backup withholding amount.
Step 6: Furnish Copy B to Recipients by Deadline
Provide Copy B to recipients by January 31, 2019, for all boxes. The deadline extends to February 15, 2019, only when reporting exclusively box 8 (substitute payments instead of dividends or interest) or box 14 (gross proceeds to attorney). Failure to timely furnish Copy B may result in penalties under section 6722 (failure to furnish correct payee statements).
Step 7: File Copy A with the IRS by the Deadline
File Copy A with the IRS by January 31, 2019, if reporting box 7 nonemployee compensation, regardless of filing method. For all other boxes (1 through 6, 8, 10, 13, 14, 15a, and 15b), file by February 28, 2019, if filing on paper, or April 1, 2019, if filing electronically.
Step 8: Complete Form 1096 Transmittal
Prepare Form 1096 as a transmittal covering all 1099-MISC forms filed and attach it to Copy A when filing with the IRS. Do not print Copy A from the IRS website. Use scannable forms provided by authorized vendors, as per the 2018 General Instructions for Certain Information Returns, to ensure proper processing.
Recipient Reporting Requirements
Step 9: Report Box 7 Nonemployee Compensation
Report box 7 amounts on Schedule C (Form 1040) if the income represents self-employment subject to self-employment tax. Complete Schedule SE when net earnings from self-employment reach $400 or more. If the income does not represent self-employment activity, such as sporadic or hobby income, report it on the “Other income” line of Form 1040 or Form 1040NR.
Step 10: Handle Disputed Employment Status
If you believe you are an employee but the payer treated you as an independent contractor and did not withhold income or employment taxes, report the amount on the “Wages, salaries, tips, etc.” line of Form 1040 or Form 1040NR. Complete and attach Form 8919 (Uncollected Social Security and Medicare Tax on Wages) to calculate and report your share of uncollected employment taxes.
Step 11: Report Section 409A Amounts
Box 15a shows current-year deferrals under compliant section 409A plans. These amounts are not currently taxable unless a distribution triggers the inclusion of income. Box 15b shows noncompliant plan income or taxable distributions. Include box 15b amounts in taxable income and compute the substantial additional tax per section 409A(a)(1)(B) instructions. Report this tax on Form 1040 or Form 1040NR.
Step 12: Report Attorney Gross Proceeds
If you received box 14 gross proceeds as an attorney, report only the taxable portion as income. Subtract any nontaxable recovery of basis or return of capital before reporting on your tax return. The gross amount reported in Box 14 includes payments for legal services, but not all of it may be taxable income.
Step 13: Review FATCA Reporting Obligations
If the FATCA filing requirement box is checked, the payer reported this form to satisfy Chapter 4 account reporting requirements. You may have separate FATCA reporting obligations. Review Form 8938 instructions to determine if you must file a statement of specified foreign financial assets.
Key 2018 Updates and Considerations
Section 409A Compliance Bifurcation
Boxes 15a and 15b reflect the statutory requirement to separately report deferrals compliant with section 409A from noncompliant plan income and taxable distributions subject to substantial additional tax. This split did not appear in prior years and requires payers to verify plan documentation before reporting.
Differentiated Filing Deadlines
The January 31, 2019, filing deadline with the IRS applies only to forms reporting nonemployee compensation in Box 7, using either paper or electronic filing. All other boxes have a deadline of February 28, 2019, for paper filing or April 1, 2019, for electronic filing. The February 15, 2019, recipient copy deadline applies exclusively when reporting only boxes 8 or 14.
Box 6 Medical Payments Retained
Box 6 for medical and health care payments continues in 2018. Payers must report payments of $600 or more to health care providers. Recipients must distinguish between taxable payments and nontaxable reimbursements or insurance benefits, as outlined in Publication 525. Self-employed recipients typically report these amounts on Schedule C.
Backup Withholding Rules Continue
Backup withholding reported in box 4 continues under existing rules with no threshold or rate changes for 2018. The backup withholding rate remains 24 percent for payments subject to withholding when recipients fail to provide valid TINs or meet other backup withholding conditions.
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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.
