Do I have to send a corporation a 1099-MISC?

In most cases payments you make to a corporation are not reportable on a 1099-MISC.  However, the following payments are reportable.

  • Medical and health care payments (See additional FAQ for further information)
  • Fish purchases you make for cash
  • Attorney’s fees
  • Gross proceeds paid to an attorney
  • Substitute payments you make to a vendor in lieu of dividends or tax-exempt interest
  • Payments by a federal executive agency for services (this only applies to you if you are a federal executive agency)

What is the 1099-MISC form used for?

Businesses file Form 1099-MISC, Miscellaneous Income for each person (who’s not an employee) and unincorporated business (with some exceptions) in the course of your business to whom you have paid during the year:

    • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);
    • At least $600 in:
    1. Rents (box 1);
    2. Prizes and awards (boxes 3);
    3. Other income payments (box 3);
    4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
    5. Any fishing boat proceeds (box 5);
    6. Medical and health care payments (box 6);
    7. Crop insurance proceeds (box 9);
    8. Payments to an attorney (box 10) (see Payments to attorneys, in 1099 instructions);
    9. Section 409A deferrals (box 12); or
    10. Nonqualified deferred compensation (box 14).

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 (box 7).

You also must file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

For additional information see the Instructions for Form 1099-MISC 

Are payments made to a corporation reportable on a 1099-MISC and 1099-NEC form?

Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation) are not reportable.  However, the following payments made to corporations generally must be reported on Form 1099-MISC.

    • Medical and health care payments reported in box 6, 1099-MISC.
    • Fish purchases for cash reported in box 1, 1099-NEC.
    • Attorneys’ fees reported in box 1, 1099-NEC.
    • Gross proceeds paid to an attorney reported in box 10, 1099-MISC.
    • Substitute payments in lieu of dividends or tax-exempt interest reported in box 8, 1099-MISC.
    • Payments by a federal executive agency for services (vendors) reported in box 1, 1099-NEC.

For additional information see the Instructions for Forms 1099-MISC and 1099-NEC.

What are gross proceeds and are they reportable on a 1099-MISC form?

Gross proceeds are payments that:

  • Are made to an attorney in the course of your trade or business in connection with legal services, but not for the attorney’s services, for example, as in a settlement agreement;
  • Total $600 or more; and
  • Are not reportable by you in box 7.

Generally, you are not required to report the claimant’s attorney’s fees. For example, an insurance company pays a claimant’s attorney $100,000 to settle a claim. The insurance company reports the payment as gross proceeds of $100,000 in box 14. However, the insurance company does not have a reporting requirement for the claimant’s attorney’s fees subsequently paid from these funds. These rules apply whether or not:

  • The legal services are provided to the payer,
  • The attorney is the exclusive payee (for example, the attorney’s and claimant’s names are on one check) or,
  • Other information returns are required for some or all of a payment under another section of the Code, such as section 6041.

For example, a person who, in the course of a trade or business, pays $600 of taxable damages to a claimant by paying that amount to a claimant’s attorney is required to:

  • Furnish Form 1099-MISC to the claimant, reporting damages pursuant to section 6041, generally in box 3, and
  • Furnish Form 1099-MISC to the claimant’s attorney, reporting gross proceeds paid pursuant to section 6045(f), in box 14.

For more examples and exceptions relating to payments to attorneys, see Regulations section 1.6045-5

For additional information see the 2019 Instructions for Form 1099-MISC 

Where should punitive damage be reported on a 1099-MISC form?

Generally, report all punitive damages, any damages for nonphysical injuries or sickness, and any other taxable damages in Box 3. Report punitive damages even if they relate to physical injury or physical sickness. Generally, report all compensatory damages for nonphysical injuries or sickness, such as employment discrimination or defamation. However, do not report damages (other than punitive damages):

  1. Received on account of personal physical injuries or physical sickness;
  2. That do not exceed the amount paid for medical care for emotional distress;
  3. Received on account of nonphysical injuries (for example, emotional distress) under a written binding agreement, court decree, or mediation award in effect on or issued by September 13, 1995; or
  4. That are for a replacement of capital, such as damages paid to a buyer by a contractor who failed to complete construction of a building.

Damages received on account of emotional distress, including physical symptoms such as insomnia, headaches, and stomach disorders, are not considered received for a physical injury or physical sickness and are reportable unless described in (b) or (c) above. However, damages received on account of emotional distress due to physical injuries or physical sickness are not reportable.

Also report liquidated damages received under the Age Discrimination in Employment Act of 1967.

Taxable back pay damages may be wages and reportable on Form W-2. See Pub. 957.

For additional information see the 2019 Instructions for Form 1099-MISC