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 

Where should prizes and award be reported on a 1099-MISC form?

Report in Box 3 prizes and awards of $600 or more that are not for services performed. Include the fair market value (FMV) of merchandise won on game shows. Also include amounts paid to a winner of a sweepstakes not involving a wager. If a wager is made, report the winnings on Form W-2G.

Do not include prizes and awards paid to your employees. Report these on Form W-2. Do not include in box 3 prizes and awards for services performed by nonemployees, such as an award for the top commission salesperson. Report them in box 7.

Prizes and awards received in recognition of past accomplishments in religious, charitable, scientific, artistic, educational, literary, or civic fields are not reportable if:

  • The winners are chosen without action on their part,
  • The winners are not expected to perform future services, and
  • The payer transfers the prize or award to a charitable organization or governmental unit under a designation made by the recipient. See Rev. Proc. 87-54, 1987-2 C.B. 669.

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