Takeaways
- Form 1099-MISC is issued once you earn $600 or more in miscellaneous income.
- Income like royalties, prizes, and rent is reported on Form 1099-MISC.
- If you earned $10 in royalties or broker payments instead of dividends or tax-exempt interest, you should receive a Form 1099-MISC.
- The best online tax software programs can easily process Form 1099-MISC.
- Companies must provide Form 1099-MISC to eligible recipients and retain copies for their records.
What Is Form 1099-MISC?
Form 1099-MISC is a tax form used to report miscellaneous income paid to individuals or businesses who are not employees. It is issued by companies or other payers when they pay $600 or more during the year for services, rent, prizes, awards, or other non-wage income.
This form is part of the IRS’s Form 1099 series, which includes several forms for different types of income. The 1099-MISC is not used to report wages or salaries; that type of income is reported on a W-2. Instead, the 1099-MISC captures income that does not fall into more common categories.
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How Form 1099-MISC Works
When a business or organization pays someone $600 or more for certain services during the year, they are required to file Form 1099-MISC with the IRS and send a copy to the recipient. The recipient must then report this income on their tax return.
Some of the payments reported on Form 1099-MISC include:
- Rent payments
- Prizes and awards
- Medical and healthcare payments
- Payments to attorneys
- Crop insurance proceeds
- Fishing boat proceeds
- Other income payments not reported on other 1099 forms
Each 1099-MISC form includes the payer’s and recipient’s information, the amount paid, and a description of what the payment was for. You may receive multiple 1099-MISC forms if you did business with more than one company.
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Example of Form 1099-MISC
Source: Internal Revenue Source [1]
Who Files a 1099-MISC?
The responsibility for filing a 1099-MISC lies with the person or business that made the payment. This includes:
- Small businesses
- Landlords
- Insurance companies
- Legal firms
- Government agencies
- Nonprofits
If you paid $600 or more to an individual or business for services like consulting, freelance work, or rent, you must file a 1099-MISC. The form must be sent to both the IRS and the recipient by the required deadlines.
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How to Fill Out 1099-MISC
Filing a 1099-MISC involves three steps:
1. Gather Information: Collect the recipient’s legal name, mailing address, and Taxpayer Identification Number (TIN). This is usually done using Form W-9.
2. Report the Payment: Enter the total amount paid in the correct box on the 1099-MISC form. For example, rent goes in Box 1, while other income goes in Box 3.
3. Submit the Form: Send Copy A to the IRS by January 31 (if reporting non-employee compensation) or by February 28 if using paper forms. Send Copy B to the recipient by January 31. Keep Copy C for your records.
You can file a 1099-MISC paper form or electronically via the IRS system, approved software, or payroll services.
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Do You Pay Taxes on a 1099-MISC Form?
In short, the income reported on a 1099-MISC is generally taxable. If you receive one of these forms, the amount listed on your 1099-MISC should be included on your tax return. Unlike regular employment income, there is no withholding for federal or state taxes, so you may owe additional taxes when you file your annual taxes.
Recipients may also be required to pay self-employment tax, depending on the nature of the income. It is essential to set aside money throughout the year for taxes because you will not receive a tax refund of withheld taxes like a traditional employee might.
A business or person is only required to file and issue a Form 1099-MISC if the amount is over a specific threshold.[2] If you have received payments under $600 and not received a Form 1099-MISC, you are still required to maintain records, report, and pay taxes on the income.
1099-MISC vs. 1099-NEC
In 2020, the IRS reintroduced Form 1099-NEC to separate nonemployee compensation from the 1099-MISC. Here is how the forms differ:
- 1099-MISC: Used for rent, royalties, prizes, and other miscellaneous income.
- 1099-NEC: Used exclusively for payments of $600 or more to independent contractors or freelancers for services.
If you are a freelancer, you will likely receive a 1099-NEC. If you receive rent or prize money, it will be reported on a 1099-MISC. Knowing the difference helps you report your taxable income correctly and avoid confusion when you are filing your taxes.
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Smart Summary
Form 1099-MISC is used to report payments for rent, prizes, legal fees, and other non-wage income. Businesses that pay $600 or more in these categories must file the form with the IRS and send a copy to the recipient. If you receive a 1099-MISC, the income is generally taxable, and you must report it on your tax return. Working with a tax professional or using one of the best online tax software programs can help ensure your taxes are filed accurately.
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(1) Internal Revenue Service. Form 1099-MISC. Last Accessed January 18, 2026.
(2) Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information. Last Accessed January 18, 2026.
