Ultimate Step-by-step Guide to Fill Out Form 1099-MISC

Business owners face a series of changes right from the start of the year 2020, including the procedure to file their tax returns. The redesigned Form 1099-MISC is a major change as firms will now be using Form 1099-NEC to report their expenses towards non-employee compensations. Here is the step by step guide to fill out the Form 1099-MISC with the IRS.

Preparing to Fill the Form 1099-MISC

Before filing the Form 1099-MISC, it is important to gather all relevant information for an easy and error-free filing process.

  • Name, complete address, and phone number of the payer and their TIN
  • The TIN (Taxpayer Identification Number) of the recipient
  • The name and address of the recipient
  • Account number of the payer as applicable
  • Amount paid for the recipient in the tax year.

The Form 1099- MISC – Delineated

A few things have changed in the 2020 version of the Form. One remarkable change is Box no 7 as non-employee compensation is removed from this box and is replaced with details about direct sales. The other boxes of the form and the details about them are as follows.

Box No Description


Box No 1 Rents (real estate, pasture, machine rents) above $600
Box No 2 Royalties paid – $10 and more
Box No 3 Another Income counting to $600 or more
Box No 4 Backup withholding or any federal income tax (If applicable)
Box No 5 Fishing boat proceeds
Box No 6 Medical and Healthcare payments; $600 and above
Box No 7 Payer made direct sales of $5000 or more – Do not enter the amount and just mark ‘X’ against the box.
Box No 8 Dividends and interests that are paid; the minimum amount is $10.
Box No 9 Cover crop insurance proceeds of $600 or more
Box No 10 Gross proceeds paid to an attorney for his legal services
Box No 12 Section 409A deferrals
Box No 13 Golden Parachute payments
Box No 14 Deferred compensation
Box No 15-17 Used by payers who involve in the combined state filing program.

How to File Form 1099- MISC?

The step by step guide to filing the Form 1099- MISC is as follows.

  • Collect the information for each contractor, and verify them for authenticity.
  • Calculate the entire amount paid to the contractor during the year.
  • Enter payer’s and recipient’s name, address, and TIN.
  • Fill the applicable boxes in the form.
  • Submit Copy A of the Form to the IRS on or before March 1, 2021, if filed by paper and or before March 31, 2021, if filed electronically.
  • Submit Copy A to the state tax department as applicable, (in some states like Pennsylvania).
  • Submit copy B of the Form to the contractor before February 1, 2021
  • Keep copy B of the Form in the business records as well.
  • Form 1099-MISC can be either filed online or be mailed to the IRS. To e-File, the Form, make use of the IRS’s FIRE system.

Form 1099s are information returns that are to be prepared and reported by businesses with relevance to the various payments they make during their trade. They will invite heavy penalties if they fail to comply with the filing requirements of Form 1099-MISC.