June 17, 2022
If a business or self-employed individual receives or makes certain payments, it may need to file an information return to the IRS. Depending on the situation and purpose, the business may file different forms to recipients. This article summarizes the appropriate forms to be used.
Make a Payment
Please refer to the following descriptions for the triggers and examples of information returns to be reported.
Form 1099-MISC Payers must file Form 1099-MISC, Miscellaneous Information, for each person to whom they pay during the year:
at least $10 in gross royalty payments;
at least $10 in substitute payments in lieu of dividends or tax-exempt interest paid by a broker; or
at least $600 of fixed or determinable income include:
o Rents;
o Prizes and awards;
o Other income payments;
o Generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
o Any fishing boat proceeds;
o Medical and health care payments;
o Crop insurance proceeds;
o Gross proceeds paid to an attorney;
o Section 409A deferrals; or
o Nonqualified deferred compensation.
In addition, this form is used to report direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. Payers must also file Form 1099-MISC for each person from whom they have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.
Generally, the due date to file Form 1099-MISC to IRS is February 28 if it is paper filed, or March 31 if it is e-filed without extension. If the payer files the extension requests to IRS by the original due dates, the extended deadline for paper filing is March 31, or May 2 if it is e-filed.
Form 1099-NEC Beginning with the tax year 2020, payers must use Form 1099-NEC, Nonemployee Compensation, to report payments of nonemployee compensation (NEC) previously reported in box 7 on Form 1099-MISC. Payers must file Form 1099-NEC, for each person to whom they paid at least $600 during the year:
for services in the course of one’s trade or business (including government agencies and nonprofit organizations).
to an individual, partnership, estate, or, in some cases, a corporation.
for services performed by someone who is not the payer’s employee (including parts and materials); or
payments of attorneys' fees to an attorney, a law firm, or other provider of legal services.
Generally, the due date to file Form 1099-NEC to IRS is January 31 and there’s no automatic 30-day extension to file Form 1099-NEC except for certain hardship conditions.
Form 1099-INT Certain interest payments of $10 or more for the calendar year; payments of interest of $600 or more made in the course of a trade or business and not otherwise qualifying for reporting.
Form 1099-DIV Payments of dividends and other distributions of $10 or more for the calendar year; payments in liquidation of $600 or more for the calendar year.
Form 1099-R Distribution of $10 or more from pensions, annuities, retirement or profit-sharing plans, IRAs, insurance contracts, etc.
Form 1099-K Payments to merchants or other entities in settlement of reportable payment transactions, that is, any payment card or third-party network transaction.
Received a Payment and Other Reporting Situations
If an entity receives any of the following types of payments, it may be required to file an information return:
Form 1098 Mortgage interest (including points) and certain mortgage insurance premiums you received in the course of one’s trade or business from individuals and reimbursements of overpaid interest of $600 or more.
Form 1099-S Gross proceeds from the sale or exchange of real estate and certain royalty payments of $600 or more.
Form 1099-B A broker reports sales or redemptions of securities, futures transactions, commodities, and barter exchange transactions.
Form 8937 An issuer of a specified security that takes an organizational action that affects the basis of that security.
Form 1099-A A lender reports information about the acquisition or abandonment of property that is security for a debt.
Form 1099-MISC One made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment
Recipient’s TIN
Information return filers may be subjected to penalties if reporting an incorrect or missing taxpayer identification number (TIN). IRS uses TINs to verify the amounts reported on the information returns with the ones on the tax returns. Thus, the filers must report the correct social security numbers (SSNs), individual taxpayer identification numbers (ITINs), employer identification numbers (EINs), or adoption taxpayer identification numbers (ATINs) of recipients on the forms.
If the receipt is a U.S. person or U.S. resident alien, the filer may request a Form W-9, Request for Taxpayer Identification Number and Certification, or Form W-9S, Request for Student’s or Borrower’s Taxpayer Identification Number and Certification. If the recipient is a foreign person, the filer may request a Form W-8 from the recipient. Those forms or information should be collected before filing the information returns.
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