The IRS tax Form 1099-MISC is used to report miscellaneous income. Until the tax year 2019, this tax Form is used to report non-employee compensation in Box- 7 of the tax Form. Beginning from the tax year 2020, the IRS has reintroduced Form 1099-NEC to report the non-employee compensation on a completely different Form. Box 7 of the 1099-MISC is now replaced and is used to report direct sales of $5000 or more. For the 2022 tax year, the checkbox for the FATCA filing requirement can be found in Box 13. To accommodate this change, Boxes 13 to 17 are now numbered from 14 to 18.
What is Miscellaneous income?
Miscellaneous income is a category that includes different sources of income that are generally not thought of as revenue. Some examples of miscellaneous income include the money received from gambling winnings, leisure games, etc. It will be challenging for taxpayers to classify certain income they receive during their business transactions.
These are categorized as miscellaneous income and include a broad category of accounts, including canceled debt, proceeds of endowment contracts, bartering, etc. According to the IRS, taxpayers must report even illegal income through Form 1099-MISC. Miscellaneous income includes payments received as royalties, rent payments, fishing boat proceeds, crop insurance, gross proceeds to an attorney, fish purchases, health care payments, and other income payments.
Businesses should report all the qualifying miscellaneous incomes on the tax Form 1099-MISC with the IRS for tax purposes. They should also report direct sales totaling $5000 or more on the Form, along with golden parachute payments. Before 2020, Form 1099-MISC also included non-employee compensation, which is the payment made to independent contractors. Now, Non-employee compensation is reported in another tax Form 1099-NEC.
Who should file Form 1099-MISC for the 2022-23 tax year?
Taxpayers should file Form 1099 MISC for each payee to whom they have paid the following payments during the tax year.
At least $10 in royalties or as broker payments in place of tax-exempt interest or dividends.
If you have paid $600 as rent, prizes and awards, medical and health care payments, and other income payments.
If you have paid $600 as medical and health care payments, crop insurance proceeds, payments to an attorney, and fishing boat proceeds.
Cash payments towards the purchase of fish or any aquatic life from anyone engaged in catching fish.
$600 or more paid from a notional principal contract to a partnership, estate, or individual.
Taxpayers can also use Form 1099-MISC to report that they have made direct sales of about $5000 of consumer products to a buyer for resale anywhere other than a retail establishment.
Changes to Form 1099-MISC for the 2022-23 Tax Year
The IRS has made a few updates to the IRS 1099-MISC form, which will be effective from the tax year 2022. These changes as compiled as follows.
1.Changes in Box 13:
Box 13 in the IRS Form 1099-MISC is used to report the Foreign Account Tax Compliance Act filing requirement. Because of this update, the original boxes 13 to 17 have been renumbered. The 1099-MISC for 2021 has ‘Excess golden parachute payments in box 13. In 1099-MISC for the tax year 2022, Box no 13 corresponds to the ‘FATCA filing requirement,’ and Box 14 corresponds to ‘Excess golden parachute payments.
2. Changes to Box 14:
In the 1099-MISC tax Form for the year 2021, Box 14 requires taxpayers to report non-qualified deferred compensation and is used to report the payment under NQDC plans. Form 1099-MISC for the year 2022 reports Excess golden parachute payments in Box 14.
3. Changes to Box 15:
In the past year’s tax Form, Box-15 was used to report the state-withheld taxes, and for the current tax year, this Box is used to report the payment under the NQDC plans.
4. Changes in Box 16:
Box 16 of the tax Form was used to report the state number of the payer till the year 2021. From the tax year 2022, Box 16 will be used to report the state-withheld taxes.
5. Changes in Box 17:
Box 17 of the 1099-MISC tax Form was used to report state income, and for the tax year 2022-23, Box 17 was used to report the state number of the payer.
8. Changes in Box 18:
From the tax year 2022, box 18 of the IRS form 1099-MISC is used to report the state income of the payer.
Deadlines for the IRS tax Form 1099-MISC
The Internal Revenue Service requires taxpayers to issue a copy of the tax Form 1099-MISC to its recipients by the end of 31st January of the tax year. The deadline to submit the paper copies of the Form with the IRS is 28th February. The e-filing deadline to file Form 1099-MISC is 31st March.
The IRS requires its taxpayers to e-file the tax Form rather than paper file it, as it is a simpler method. Also, it is easy for the IRS to track the electronic copies of the Form. It is extremely efficient than tracking the paper copies of the IRS Form. Form 1099-MISC for the tax year 2022-23 is as follows.
Deadline to file recipient copies: 31st January 2023
Deadline to file paper copies with the IRS: 28th February 2023
Deadline for E-filing the tax Form: 31st March 2023.
The IRS requires its tax Payers to furnish information such as the taxpayer’s name, address, contact number, and TIN. It is also important to submit the recipient’s details, such as name, address, and the recipient’s TIN. From boxes 1 to 18, taxpayers must report the miscellaneous payment in the boxes.
Tax2efile is an IRS-authorized e-filing service provider to report business tax Forms, including the 1099 Forms series. Tax2efile also renders several unique features to help with an easy, secure, and accurate tax filing experience. Their service professionals are available round the clock to assist taxpayers in starting filing their taxes instantly.
Reference Link: irs.gov