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1099-MISC Income vs Other Income Types

1099-MISC Income vs Other Income Types

Form 1099-MISC reports payments made by businesses to report certain types of compensation, such as rents, prizes, awards, and healthcare payments. There are also specific types of payments to an attorney or physician that are reportable on a 1099-MISC and some rarely used tracking for specific industries such as commercial fishing boats. Historically, this form has been used in the past to report all non-employee compensation. Still, the current regulations require the use of the 1099-NEC for general-purpose reporting of these payments and have re-focused the use of the 1099-MISC. 

In short, for most taxpayers the 1099-MISC will be used for payments of rents and awards and in some limited cases payments to an attorney only as most of the non-employee income was moved to the 1099-NEC in the 2020 tax year. 

What’s the difference between self-employment income and other income? 

Category Self-Employment Income Other Income 
Nature of Income Income earned as an independent worker, e.g., contractor, consultant, freelancer Income from sources like prizes, awards, lawsuit settlements, etc. 
Reported on 1099-NEC (Box 1), 1099-K (Box 1a), or as cash, check, or credit card sales transactions 1099-MISC (Box 3) 
Reporting Form This may require completion of Schedule C Report on Line 8 of Schedule 1 of Form 1040 
Expense Deductions Allows deductions for related business expenses N/A (deductions may vary depending on the nature of other income) 
Taxation Subject to self-employment tax (Social Security and Medicare) Taxation varies based on the specific type of other income 

Other Incomes (Boxes 1-14 of Form 1099-MISC) 

Here are some common types of payments that are documented on Form 1099-MISC: 

  • Rental Income: Landlords receive a 1099-MISC from tenants or property management companies to report rent paid during the year. 
  • Prizes and Awards: Large cash payments, including casino winnings, are reported using a 1099-MISC. 
  • Legal Settlements: Payments like legal settlements are also recorded on a 1099-MISC. 
  • Certain Reimbursements: For contractors who are regularly reimbursed for purchases made on behalf of clients (like supplies), these payments, not subject to self-employment tax, may be reported on Form 1099-MISC
Box Description 
Box 1 Payments received for rental activities 
Box 2 Payments received as royalties 
Box 3 Miscellaneous income not categorized elsewhere 
Box 4 Federal income tax withheld 
Box 5 Proceeds from fishing boat activities 
Box 6 Payments for medical and healthcare services 
Box 7 Direct sales totaling $5,000 or more of consumer products to a recipient for resale (Check this box if applicable) 
Box 8 Substitute payments in lieu of dividends or interest 
Box 9 Proceeds from crop insurance 
Box 10 Gross payments made to an attorney 
Box 11 Fish purchased for resale 
Box 12 Deferrals under Section 409A 
Box 13 FATCA Filing Requirement 
Box 14 Excess payments related to employment contracts 
Box 15 Nonqualified deferred compensation 
Box 16 State tax withheld 
Box 17 Payer’s state tax identification number 
Box 18 State income 
Form 1099-MISC Boxes

What’s changed on the new 1099-MISC? 

Certain thresholds trigger the need for reporting on the 1099-MISC form: 

Royalties (Box 2) or Broker Payments (Box 8): 

  • $10 or more in royalties (Box 2). 
  • $10 or more in broker payments in lieu of dividends or tax-exempt interest (Box 8). 

Various Income Categories (Box 1, 3, 5, 6, 9, 10, 12, and 14): 

  • $600 or more in: 
  • Rent (Box 1). 
  • Prizes and awards (Box 3). 
  • Other income payments (Box 3). 
  • Cash paid from a notional principal contract (Box 3). 
  • Fishing boat proceeds (Box 5). 
  • Medical and health care payments (Box 6). 
  • Crop insurance proceeds (Box 9). 
  • Payments to an attorney (Box 10). 
  • Section 409A deferrals (Box 12). 
  • Nonqualified deferred compensation (Box 14). 

Meeting or exceeding these thresholds necessitates reporting on the respective boxes of the 1099-MISC form. 

How to eFile 1099-MISC with Tax1099 for TY 2023? 

  1. Provide Federal Tax Information 
  1. Add State Tax Information 
  1. Review and Validate Form 1099-MISC Data 
  1. Submit your 1099-MISC Form to the IRS 
  1. Send Recipient Copy via Email or Download as PDF