understanding the 1099-misc

If you are in business, you will most likely come across a form 1099 misc at some point. Here are some quick tips and info on how to handle this form.

Receiving a 1099-Misc

If you work in a direct sales type of business, this is the form your company is going to send you to report your total sales commission for the year. Maybe you do freelance work, if any one company paid you more than $600 then you should be receiving a 1099 misc as well. 


1099misc 2015

When you send, or receive, a 1099 misc the most common lines you are going to see income reported on are line 7 which is “Non-employee compensation”. Occasionally you will see one with boxes 1,2,or 3 filled in for Rents, Royalties, or other income. If you are a medical, dental, or other health practitioner, and bill insurance companies you will receive these with income listed in box 6. What box your income is reported on determines what types of taxes you will pay on that income.

It is customary for tax to Not be withheld on Non-employee compensation. This is why you have to file a Schedule C and Self Employment Tax form on your taxes when you receive a 1099 misc with income on line 6 or 7.

Sending a 1099-Misc

If you are a company that hires contract workers then you are required to submit 1099 misc for anyone you paid over $600. This means you file a copy with the IRS and send a copy to the recipient no later than Jan 31st.

If you think you need to issue someone a 1099 misc because you paid them over $600 in one year for services, or rent, you first need to have them fill out a W-9 form.  The W-9 verifies their information, including Tax ID. Here's the link to the IRS form

Quick Facts:

  • If the company you paid is a Corporation, you do not have to issue them a 1099 misc.
  • If you paid that person with your credit card, you do not have to issue them a 1099 misc, If you paid them via cash, check, bank transfer, or bill pay  you Do have to issue them a 1099 misc.


If you are wondering how on earth to issue a 1099-Misc correctly, the easiest way is to use an online service to efile it for you. I like to you a service called Tax1099.com. They are reasonably priced and have intergrations with most common bookkeeping software.  

If you would rather get help with your 1099's then head on over to my contact page and I'll be happy to help!

To learn more directly from the IRS website head over here.

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