Table of Contents
- Specific Instructions
- Account Number
- Box 1. Rents
- Box 2. Royalties
- Box 3. Other Income
- Box 4. Federal Income Tax Withheld
- Box 5. Fishing Boat Proceeds
- Box 6. Medical and Health Care Payments
- Box 7. Nonemployee Compensation
- Box 8. Substitute Payments in Lieu of Dividends or Interest
- Box 9. Payer Made Direct Sales of $5,000 or More
- Box 10. Crop Insurance Proceeds
- Boxes 11 and 12. Reserved
- Box 13. Excess Golden Parachute Payments
- Box 14. Gross Proceeds Paid to an Attorney
- Box 15a. Section 409A Deferrals
- Box 15b. Section 409A Income
- Boxes 16–18. State Information
File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:
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At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest (see Box 8 on page 6);
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At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
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Any fishing boat proceeds; or
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Gross proceeds to an attorney. See Payments to attorneys on page 2.
In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.
Be sure to report each payment in the proper box because the IRS uses this information to determine whether the recipient has properly reported the payment.
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Generally, payments to a corporation; but see Reportable payments to corporations on page 2;
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Payments for merchandise, telegrams, telephone, freight, storage, and similar items;
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Payments of rent to real estate agents, but see Regulations section 1.6041-1(e)(5), Example 5;
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Wages paid to employees (report on Form W-2, Wage and Tax Statement);
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Payments made to former employees while they are on active duty for a period of more than 30 days in the Armed Forces or other uniformed services (report on Form W-2);
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Business travel allowances paid to employees (may be reportable on Form W-2);
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Cost of current life insurance protection (report on Form W-2 or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.);
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Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government; and
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Certain payment card transactions if a payment card organization has assigned a merchant/payee a Merchant Category Code (MCC) indicating that reporting is not required. A cardholder/payor may rely on the MCC assigned to a merchant/payee to determine if a payment card transaction with that merchant/payee is subject to reporting under section 6041 or section 6041A. For more information and a list of merchant types with corresponding MCCs, see Revenue Procedure 2004-43 available at www.irs.gov/irb/2004-31_IRB/ar17.html.
A payment to an informer as an award, fee, or reward for information about criminal activity is not required to be reported if the payment is made by a federal, state, or local government agency, or by a nonprofit organization exempt from tax under section 501(c)(3) that makes the payment to further the charitable purpose of lessening the burdens of government. For more information, see Regulations section 1.6041-3(l).
Do not use Form 1099-MISC to report scholarship or fellowship grants. Scholarship or fellowship grants that are taxable to the recipient because they are paid for teaching, research, or other services as a condition for receiving the grant are considered wages and must be reported on Form W-2. Other taxable scholarship or fellowship payments (to a degree or nondegree candidate) are not required to be reported by you to the IRS on any form. See Notice 87-31, 1987-1 C.B. 475, and Regulations section 1.6041-3(n) for more information.
Difficulty-of-care payments that are excludable from the recipient's gross income are not required to be reported. Difficulty-of-care payments to foster care providers are not reportable if paid for not more than 10 children under age 19 and not more than five individuals age 19 or older. Amounts paid for more than 10 children or more than five other individuals are reportable on Form 1099-MISC.
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Medical and health care payments reported in box 6.
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Fish purchases for cash reported in box 7.
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Attorneys' fees reported in box 7.
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Gross proceeds paid to an attorney reported in box 14.
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Substitute payments in lieu of dividends or tax-exempt interest reported in box 8.
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Payments by a federal executive agency for services (vendors) reported in box 7.
Federal executive agencies may also have to file Form 8596, Information Return for Federal Contracts, and Form 8596-A, Quarterly Transmittal of Information Returns for Federal Contracts, if a contracted amount for personal services is more than $25,000. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf for details.
Under section 6045(f), report in box 14 payments to an attorney made in the course of your trade or business in connection with legal services, for example, as in a settlement agreement, unless the attorney's fees are reportable by you in box 7. Generally, you are not required to report the claimant's attorney's fees. For example, an insurance company pays a claimant's attorney $100,000 to settle a claim. The insurance company reports the payment as gross proceeds of $100,000 in box 14. The insurance company does not have a reporting requirement for the claimant's attorney's fees subsequently paid from these funds.
These rules apply whether or not the legal services are provided to the payer and whether or not the attorney is exclusive payee (for example, the attorney's and claimant's names are on one check) or other information returns are required for some or all of a payment under section 6041A(a)(1). For example, a person who, in the course of a trade or business, pays $600 of taxable damages to a claimant by paying that amount to a claimant's attorney is required to furnish Form 1099-MISC to the claimant under section 6041 and furnish Form 1099-MISC to the claimant's attorney under section 6045(f). For more examples and exceptions relating to payments to attorneys, see Regulations section 1.6045-5.
However, these rules do not apply to wages paid to attorneys that are reportable on Form W-2 or to profits distributed by a partnership to its partners that are reportable on:
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Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc., or
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Schedule K-1 (Form 1065-B), Partner's Share of Income (Loss) From an Electing Large Partnership.
The exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, you must report attorneys' fees (in box 7) or gross proceeds (in box 14) as described earlier to corporations that provide legal services.
To report payments to an attorney on Form 1099-MISC, you must obtain the attorney's TIN. You may use Form W-9, Request for Taxpayer Identification Number and Certification, to obtain the attorney's TIN. An attorney is required to promptly supply its TIN whether it is a corporation or other entity, but the attorney is not required to certify its TIN. If the attorney fails to provide its TIN, the attorney may be subject to a penalty under section 6723 and its regulations, and you must backup withhold on the reportable payments.
Example.
Before Employee A's death on June 15, 2009, A was employed by Employer X and received $10,000 in wages on which federal income tax of $1,500 was withheld. When A died, X owed A $2,000 in wages and $1,000 in accrued vacation pay. The total of $3,000 (less the social security and Medicare taxes withheld) was paid to A's estate on July 20, 2009. Because X made the payment during the year of death, X must withhold social security and Medicare taxes on the $3,000 payment and must complete Form W-2 as follows.
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Box 1—10000.00 (does not include the $3,000 accrued wages and vacation pay)
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Box 2—1500.00
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Box 3—13000.00 (includes the $3,000 accrued wages and vacation pay)
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Box 4—806.00 (6.2% of the amount in box 3)
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Box 5—13000.00 (includes the $3,000 accrued wages and vacation pay)
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Box 6—188.50 (1.45% of the amount in box 5)
Employer X also must complete Form 1099-MISC as follows.
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Boxes for recipient's name, address, and TIN—the estate's name, address, and TIN.
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Box 3—3000.00 (Even though amounts were withheld for social security and Medicare taxes, the gross amount is reported here.)
If Employer X made the payment after the year of death, the $3,000 would not be subject to social security and Medicare taxes and would not be shown on Form W-2. However, the employer would still file Form 1099-MISC.
Section 530 of the Revenue Act of 1978 as extended by section 269(c) of P.L. 97-248 deals with the employment tax status of independent contractors and employees. To qualify for relief under section 530, employers must file Form 1099-MISC. Additional requirements for relief are discussed in Rev. Proc. 85-18, 1985-1 C.B. 518. Also see Pub. 15-A, Employer's Supplemental Tax Guide, for special rules that may apply to technical service specialists and test proctors and room supervisors.
Q/A-24.
For information on the TIN Matching System offered by the IRS, see the 2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.
The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-MISC. Additionally, the IRS encourages you to designate an account number for all Forms 1099-MISC that you file. See part L in the 2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.
Enter amounts of $600 or more for all types of rents, such as real estate rentals paid for office space (unless paid to a real estate agent), machine rentals (for example, renting a bulldozer to level your parking lot), and pasture rentals (for example, farmers paying for the use of grazing land). If the machine rental is part of a contract that includes both the use of the machine and the operator, the rental should be prorated between the rent of the machine (reported in box 1) and the operator's charge (reported as nonemployee compensation in box 7).
Public housing agencies must report in box 1 rental assistance payments made to owners of housing projects. See Rev. Rul. 88-53, 1988-1 C.B. 384.
If an arrangement between an owner of coin-operated amusements and an owner of a business establishment where the amusements are placed is a lease of the amusements or the amusement space, the owner of the amusements or the owner of the space, whoever makes the payments, must report the lease payments in box 1 of Form 1099-MISC if the payments total at least $600. However, if the arrangement is a joint venture, the joint venture must file a Form 1065, U.S. Return of Partnership Income, and provide each partner with the information necessary to report the partner's share of the taxable income. Coin-operated amusements include video games, pinball machines, jukeboxes, pool tables, slot machines, and other machines and gaming devices operated by coins or tokens inserted into the machines by individual users. For more information, see Rev. Rul. 92-49, 1992-1 C.B. 433.
Enter gross royalty payments of $10 or more before reduction for severance and other taxes that may have been withheld and paid. Use box 2 to report gross royalties (before reduction for fees, commissions, or expenses) paid by a publisher directly to an author or literary agent, unless the agent is a corporation. The literary agent (whether or not a corporation) that receives the royalty payment on behalf of the author must report the gross amount of royalty payments to the author on Form 1099-MISC whether or not the publisher reported the payment to the agent on its Form 1099-MISC. Do not include surface royalties. They should be reported in box 1. Do not report oil or gas payments for a working interest in box 2; report payments for working interests in box 7. Do not report timber royalties made under a pay-as-cut contract; report these timber royalties on Form 1099-S, Proceeds From Real Estate Transactions.
Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form.
Also enter in box 3 prizes and awards that are not for services performed. Include the fair market value (FMV) of merchandise won on game shows. Also include amounts paid to a winner of a sweepstakes not involving a wager. If a wager is made, report the winnings on Form W-2G, Certain Gambling Winnings.
If, not later than 60 days after the winner becomes entitled to the prize, the winner can choose the option of a lump sum or an annuity payable over at least 10 years, the payment of winnings is considered made when actually paid. If the winner chooses an annuity, file Form 1099-MISC each year to report the annuity paid during that year.
Do not include prizes and awards paid to your employees. Report these on Form W-2. Do not include in box 3 prizes and awards
for services performed by nonemployees, such as an award for the top commission salesperson. Report them in
box 7.
Prizes and awards received in recognition of past accomplishments in religious, charitable, scientific, artistic, educational, literary, or civic fields are not reportable if:
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The winners are chosen without action on their part,
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The winners are not expected to perform future services, and
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The payer transfers the prize or award to a charitable organization or governmental unit under a designation made by the recipient. See Rev. Proc. 87-54, 1987-2 C.B. 669.
Other items required to be reported in box 3 include the following.
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Generally, all punitive damages, any damages for nonphysical injuries or sickness, and any other taxable damages. Report punitive damages even if they relate to physical injury or physical sickness. Generally, report all compensatory damages for nonphysical injuries or sickness, such as employment discrimination or defamation. However, do not report damages (other than punitive damages):
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Received on account of personal physical injuries or physical sickness;
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That do not exceed the amount paid for medical care for emotional distress;
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Received on account of nonphysical injuries (for example, emotional distress) under a written binding agreement, court decree, or mediation award in effect on or issued by September 13, 1995; or
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That are for a replacement of capital, such as damages paid to a buyer by a contractor who failed to complete construction of a building.
Damages received on account of emotional distress, including physical symptoms such as insomnia, headaches, and stomach disorders, are not considered received for a physical injury or physical sickness and are reportable unless described in b or c above. However, damages received on account of emotional distress due to physical injuries or physical sickness are not reportable.
Also report liquidated damages received under the Age Discrimination in Employment Act of 1967.
Taxable back pay damages may be wages and reportable on Form W-2. See Pub. 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration.
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Payments as explained on page 2 under Deceased employee's wages.
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Payments as explained on page 3 under Indian gaming profits, payments to tribal members.
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Payments made to former employees while they are in military service with the United States Government or active service with the National Guard, if they are on active duty for a period of 30 days or fewer. If a former employee is on active duty for a period of more than 30 days, see Exceptions on
page 1. -
Termination payments to former self-employed insurance salespeople. These payments are not subject to self-employment tax and are reportable in box 3 (rather than box 7) if all the following apply.
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The payments are received from an insurance company because of services performed as an insurance salesperson for the company.
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The payments are received after termination of the salesperson's agreement to perform services for the company.
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The salesperson did not perform any services for the company after termination and before the end of the year.
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The salesperson enters into a covenant not to compete against the company for at least 1 year after the date of termination.
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The amount of the payments depends primarily on policies sold by the salesperson or credited to the salesperson's account during the last year of the service agreement or to the extent those policies remain in force for some period after termination, or both.
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The amount of the payments does not depend at all on length of service or overall earnings from the company (regardless of whether eligibility for payment depends on length of service).
If the termination payments do not meet all these requirements, report them in box 7.
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A payment or series of payments made to individuals for participating in a medical research study or studies.
Enter backup withholding. For example, persons who have not furnished their TIN to you are subject to withholding at a 28% rate on payments required to be reported in boxes 1, 2 (net of severance taxes), 3, 5 (to the extent paid in cash), 6, 7 (except fish purchases for cash), 8, 10, and 14. For more information on backup withholding, see part N in the 2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.
Also enter any income tax withheld from payments to members of Indian tribes from the net revenues of class II or class III gaming activities conducted or licensed by the tribes.
Regulations section 31.3406(g)-1(f) provides that backup withholding is not required for certain payment card transactions.
At the time these instructions went to print, the IRS had published proposed changes to Regulations section 31.3406(g)-1(f). Also, a proposed revenue procedure was published in Notice 2007-59. For more information, go to www.irs.gov and enter “QPCA” in the upper right corner.
Enter the share of all proceeds from the sale of a catch or the FMV of a distribution in kind to each crew member of fishing boats with normally fewer than 10 crew members. A fishing boat has normally fewer than 10 crew members if the average size of the operating crew was fewer than 10 on trips during the preceding 4 calendar quarters.
In addition, report cash payments of up to $100 per trip that are contingent on a minimum catch and are paid solely for additional duties (such as mate, engineer, or cook) for which additional cash payments are traditional in the industry. However, do not report on Form 1099-MISC any wages reportable on Form W-2.
Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs.
The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States (or its possessions), a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.
Generally, payments made under a flexible spending arrangement (as defined in section 106(c)(2)) or a health reimbursement arrangement which is treated as employer-provided coverage under an accident or health plan for purposes of section 106 are exempt from the reporting requirements of section 6041.
Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf.
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You made the payment to someone who is not your employee;
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You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
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You made the payment to an individual, partnership, estate, or, in some cases, a corporation; and
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You made payments to the payee of at least $600 during the year.
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Professional service fees, such as fees to attorneys (including corporations), accountants, architects, contractors, engineers, etc.
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Fees paid by one professional to another, such as fee-splitting or referral fees.
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Payments by attorneys to witnesses or experts in legal adjudication.
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Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service. For example, report the total insurance company payments to an auto repair shop under a repair contract showing an amount for labor and another amount for parts, if furnishing parts was incidental to repairing the auto.
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Commissions paid to nonemployee salespersons that are subject to repayment but not repaid during the calendar year.
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A fee paid to a nonemployee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer, if the fee and reimbursement total at least $600. To help you determine whether someone is an independent contractor or an employee, see Pub. 15-A.
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Payments to nonemployee entertainers for services. Use Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, for payments to nonresident aliens.
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Exchanges of services between individuals in the course of their trades or businesses. For example, an attorney represents a painter for nonpayment of business debts in exchange for the painting of the attorney's law offices. The amount reportable by each on Form 1099-MISC is the FMV of his or her own services performed. However, if the attorney represents the painter in a divorce proceeding, this is an activity that is unrelated to the painter's trade or business. The attorney must report on Form 1099-MISC the value of his or her services. But the painter need not report on Form 1099-MISC the value of painting the law offices because the work is in exchange for legal services that are separate from the painter's business.
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Taxable fringe benefits for nonemployees. For information on the valuation of fringe benefits, see Pub. 15-B, Employer's Tax Guide to Fringe Benefits.
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Gross oil and gas payments for a working interest.
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Payments to an insurance salesperson who is not your common law or statutory employee. See Pub. 15-A for the definition of employee. However, for termination payments to former insurance salespeople, see page 4.
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Directors' fees as explained under Directors' fees on page 3.
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Commissions paid to licensed lottery ticket sales agents as explained under Commissions paid to lottery ticket sales agents on page 3.
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Payments to section 530 (of the Revenue Act of 1978) workers. See the TIP on page 3.
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The payment is in the nature of compensation.
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The payment is to, or for the benefit of, a disqualified individual.
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The payment is contingent on a change in the ownership of a corporation, the effective control of a corporation, or the ownership of a substantial portion of the assets of a corporation (a change in ownership or control).
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The payment has (together with other payments described in 1, 2, and 3 above made to the same individual) an aggregate present value of at least three times the individual's base amount.
Enter aggregate payments of at least $10 received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer's securities. For this purpose, a customer includes an individual, trust, estate, partnership, association, company, or corporation. See Notice 2003-67, which is on page 752 of Internal Revenue Bulletin 2003-40 at www.irs.gov/pub/irs-irbs/irb03-40.pdf. It does not include a tax-exempt organization, the United States, any state, the District of Columbia, a U.S. possession, or a foreign government. File Form 1099-MISC with the IRS and furnish a copy to the customer for whom you received the payment. Also, file Form 1099-MISC for and furnish a copy to an individual for whom you received a payment in lieu of tax-exempt interest.
Substitute payment means a payment in lieu of (a) a dividend or (b) tax-exempt interest to the extent that interest (including OID) has accrued while the securities were on loan.
Enter an “X” in the checkbox for sales by you of $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale (by the buyer or any other person) anywhere other than in a permanent retail establishment. Do not enter a dollar amount in this box.
If you are reporting an amount in box 7, you may also check box 9 on the same Form 1099-MISC.
The report you must give to the recipient for these direct sales need not be made on the official form. It may be in the form of a letter showing this information along with commissions, prizes, awards, etc.
Enter crop insurance proceeds of $600 or more paid to farmers by insurance companies unless the farmer has informed the insurance company that expenses have been capitalized under section 278, 263A, or 447.
Enter any excess golden parachute payments. An excess parachute payment is the amount of the excess of any parachute payment over the base amount (the average annual compensation for services includible in the individual's gross income over the most recent 5 taxable years). See Q/A-38 through Q/A-44 of Regulations section 1.280G-1 for how to compute the excess amount.
See Golden parachute payments on page 6 for more information.
Enter gross proceeds paid to an attorney in connection with legal services (regardless of whether the services are performed
for the payer). See Payments to attorneys on
page 2.
You do not have to complete this box. For details, see Notice 2008-115, available at www.irs.gov/irb/2008-52_IRB/index.html.
If you complete this box, enter the total amount deferred during the year of at least $600 for the nonemployee under all nonqualified plans. The deferrals during the year include earnings on the current year and prior year deferrals. For additional information, see Regulations sections 1.409A-1 through 1.409A-6.
For deferrals and earnings under NQDC plans for employees, see the Instructions for Forms W-2 and W-3.
Enter all amounts deferred (including earnings on amounts deferred) that are includible in income under section 409A because the NQDC plan fails to satisfy the requirements of section 409A. Do not include amounts properly reported on a Form 1099-MISC, corrected Form 1099-MISC, Form W-2, or Form W-2c for a prior year. Also, do not include amounts that are considered to be subject to a substantial risk of forfeiture for purposes of section 409A. For additional information, see Regulations sections 1.409A-1 through 1.409A-6; Notice 2008-113, available at www.irs.gov/irb/2008-51_IRB/ar12.html; and Notice 2008-115.
The amount included in box 15b is also includible in box 7 and generally is subject to self-employment tax.
These boxes, and Copies 1 and 2, are provided for your convenience only and need not be completed for the IRS. Use the state information boxes to report payments for up to two states. Keep the information for each state separated by the dash line. If you withheld state income tax on this payment, you may enter it in box 16. In box 17, enter the abbreviated name of the state and the payer's state identification number. The state number is the payer's identification number assigned by the individual state. In box 18, you may enter the amount of the state payment. Use Copy 1 to provide information to the state tax department. Give Copy 2 to the recipient for use in filing the recipient's state income tax return.
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