Form 1099-MISC: What It Is, How It Works
A 1099-MISC form reports certain types of miscellaneous income, including rent, prizes, royalties and other payments.
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Sometime in February, you might receive a 1099-MISC form (or more than one) in the mail. You need to hang on to it because it can have a big impact on your tax life. Here's how the 1099-MISC, titled "Miscellaneous Information," works.
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What is a 1099-MISC?
A 1099-MISC form is a type of IRS Form 1099 that reports certain types of miscellaneous income.
At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
At least $5,000 for consumer products you sold anywhere other than a permanent retail establishment.
At least $600 for:
Rent.
Prizes and awards.
Other income payments.
Medical and health care payments.
Crop insurance proceeds.
Cash payments for the purchase of fish (or other aquatic life) for resale.
Cash from a notional principal contract to an individual, partnership or estate.
Payments to an attorney.
Proceeds from a fishing boat.
Who gets a 1099-MISC?
The 1099-MISC is a common type of IRS Form 1099, which is a record of the income you earned from a business or person who is not your employer.
You might have received a 1099-MISC form from a client in the past if you're a freelancer, an independent contractor or self-employed. However, since 2020, those payments are now reported on the 1099-NEC instead.
A Form 1099-MISC will have your Social Security number or taxpayer identification number on it, which means the IRS will know you’ve received interest — and it will know if you don’t report that income on your tax return.
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What do I do with my 1099-MISC form?
You use your IRS Form 1099-MISC to help figure out how much income you received during the year and what kind of income it was. You’ll report that income in different places on your tax return, depending on the type of income.
If you need help estimating how interest income on a Form 1099-MISC could affect your tax bill, check out our free tax calculator.
Do you pay taxes on a 1099-MISC form?
Simply receiving a 1099-MISC form doesn’t necessarily mean you owe taxes on that money. You might have deductions that offset the income, for example, or some or all of it might be sheltered based on characteristics of the asset that generated it. In any case, remember: The IRS knows about it.
1099-MISC vs. 1099-NEC
In 2020, the IRS revived the 1099-NEC form for reporting nonemployee compensation. In other words, if you freelanced, were self-employed or had a side gig, your clients should send you a Form 1099-NEC instead of a Form 1099-MISC. As always, you'll use the information on that form to prepare your tax return.
» Learn more about the different types of 1099 forms
