The IRS seems to like the numeric designation 1099, judging by how many versions they have produced. There are 21 different versions of the 1099-form.
They are distinguished from one another with single letters or longer descriptive abbreviations. A few examples include:
- 1099-A, Acquisition or Abandonment of Secured Property
- 1099-B, Proceeds From Broker and Barter Exchange Transactions
- 1099-C, Cancellation of Debt
- 1099-CAP, Changes in Corporate Control and Capital Structure
- 1099-DIV, Dividends and Distributions
- 1099-G, Certain Government Payments
- 1099-INT, Interest Income
- 1099-H, Health Coverage Tax Credit Advance Payments
The 1099-MISC is used to report certain payments. In the past, you may have received the 1099-MISC if you are self-employed and provide services to a client. That compensation is now managed with a 1099-NEC, Nonemployee Compensation. The MISC reports the following payments to any person that you pay more than $600 in a year:
- Rents
- Prizes and awards
- Other income payments
- Medical and health care expenditures
- 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
- Payments to an attorney
- Any fishing boat proceeds
Also, use 1099-MISC for anyone to whom you pay at least $10 in royalties or broker payments instead of dividends or tax-exempt interest. Finally, while it's uncommon, use the MISC to report the direct sale of $5,000 or more of consumer products to any buyer in situations where the product will be resold anywhere that is not a permanent retail operation.
Do I Have to Report the Payments I Made to My Personal Lawyer?
Fortunately, no. The reporting requirements pertain to legal work related to your business. For example, the IRS doesn't need to know how much you paid a personal attorney. However, this could get complicated if you own a small company and use the same lawyer to handle late payment collections and your divorce, so keep good records.
Didn’t the 1099-MISC Previously Report Payments to Independent Contractors?
From 1982 to 2020, freelance workers and contractors received notification of their earnings from clients on the 1099-MISC. The IRS has had companies switch back to the 1099-NEC for these payments. One reason is likely the tremendous surge in payments made to independent workers. Over 50 million people performed full- or part-time contract work last year.
What Should I Do if I Receive a Form 1099-MISC?
If you receive a 1099-MISC (or any other version), you can be sure that the IRS has a copy. These informational reports let the IRS know about payments so they can track income and collect the required taxes. Check the form to ensure it's correct, and then report the income on your tax return. Otherwise, your return could be rejected, audited, or at least delayed for verification. And if you are responsible for issuing a 1099-MISC to someone to whom you made payments, the deadline to send it to the recipient is February 1.
