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1 min read

1099-MISC Form: What You Need To Know

1099 Misc Form

Key Takeaways

  • The 1099-MISC is a tax document used to report miscellaneous payments you made to contractors. If you paid more than $600 in rent, legal settlements, or prize winnings to someone who’s not an employee, you’ll send them a 1099-MISC form.
  • The 1099-MISC used to be a common way to report all payments made to contractors. Now, however, that’d be the 1099-NEC form.

You’ve probably heard of the 1099-MISC form. But what is it, and when do you need to use it? Those are the questions we’ll answer below.

What is a 1099-MISC form, and when do I use it?

The 1099-MISC form is a tax document that is used to report miscellaneous payments you made to a contractor. This includes things like:

  • Rent
  • Prize winnings
  • Legal settlements
  • Crop insurance payments
  • Medical and health care proceeds
  • Fishing boat payments

You can read the full list of 1099-MISC payments here. Most importantly, you should know that the 1099-MISC is no longer used to report standard contractor income. For this, you’ll use the 1099-NEC form.

Now, all of this information is relevant if you’re hiring contractors who are tax residents in the United States. But if you hire outside the U.S…

What if you’re hiring contractors abroad?

If you’re hiring contractors outside of the United States, the rules are a bit different: Your contractors don’t need a 1099-MISC, because they’re not paying taxes within the United States. However, you’ll have to ask your contractor to fill out a Form W-8 BEN instead. By filling out this form, your contractor is letting the United States know that they’re not a U.S. taxpayer, and thus don’t require a 1099.

At RemotePad, Lech draws on his professional experience to write about employment taxes and payroll (both remote, and in-office). Lech holds a Bachelors’ degree from the University of Kent, a Master of Arts (MA) from Kings College London, and professional payroll and tax qualifications. He has 20 years experience advising on all manner of tax and business planning matters.