We’re continuing our journey through reporting season with another Form 1099 highlight. You may have already read our previous post on Form 1099-NEC, but today, we’re taking a look at another form in the family: Form 1099-MISC (Rev. January 2024), Miscellaneous Information!
What is Form 1099-MISC?
Form 1099-MISC is used to report miscellaneous income that is paid in the course of your trade or business, such as royalties, rents, awards and other income payments. The Form 1099-MISC is a single-use form and before the 2020 tax year, the Form 1099-MISC was also used to report nonemployee compensation. However, with the Form 1099-NEC reintroduced in 2020, nonemployee compensation should now be reported on the Form 1099-NEC.
The Form 1099-MISC has various copies, outlining who you must file or send the form to. Copy A is filed with the IRS, Copy 1 is for the State Tax Department, Copy B is for the recipient, and lastly, Copy 2 is to be filed with the recipient’s state income tax return when required.
Who has to file Form 1099-MISC?
According to the IRS, anyone you have paid during the tax year that falls under the following categories:
- At least $10 in royalties or broker payments instead of dividends or tax-exempt interest.
- At least $600 in:
- Prizes and awards
- Other income payments
- Medical and health care payments
- Nonqualified deferred Compensation
- Crop insurance proceeds
- Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish
- Generally, the cash paid from a notional principal contract to an individual, partnership, or estate
- Gross Proceeds paid to an attorney
- Any fishing boat proceeds
- Section 409A deferrals
- In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
When is the Form due?
You are required to furnish the payee statements by January 31, 2024, and file with the IRS by February 28, 2024, if filing on paper or if filing electronically, by April 1, 2024 (the last day of March falls on a weekend).
What are the penalties for missing the deadline?
If a business fails to file or furnish an accurate Form 1099-MISC by the required deadline, the penalty ranges from $60 for up to 30 days late, with a maximum penalty of $630,500 per year ($220,500 for small businesses) to $310 after August 1 or if not filed at all, with a maximum penalty of $3,783,000 per year ($1,261,000 for small businesses). For tax year 2023, with forms due in 2024, the intentional disregard penalty is at least $630 per information return! Remember, there is no maximum penalty for intentional disregard.
The IRS also charges interest on penalties, where the interest amount varies by the penalty type and amount.
To download and view the form and its instructions, use the links below:
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