What is form 1099-MISC?

A 1099-MISC is a tax form used in the U.S to report miscellaneous forms of income, like rent payments and royalties.

Until 2020, 1099-MISC was used to report payments made to freelancers and contractors. That changed with the introduction of the 1099-NEC, which replaced it for that purpose. Meanwhile, Form 1099-MISC became reserved for different types of non-employee payments.

Who must report Form 1099-MISC?

A company or individual has to report a Form-MISC for each person they paid during a tax year. Examples of qualifications include:

• A minimum of $10 in royalties
• A minimum payment of $600 in the form of things like:
  • Prizes and awards
  • Payments to an attorney
  • Other income payments

Form 1099-MISC may also be used for the direct sale of at least $5000 of a consumer product to a buyer for resale. This applies only to sales made to non-permanent retail establishments – a flea market, for example.

The difference between a 1099-MISC and a W-9

Form 1099-MISC is used in terms of the actual reporting. The W-9, meanwhile, is a form that collects the payee’s info for the purpose of payment, including name, address, and taxpayer identification number.

Managing non-employee tax forms for a global workforce

Until 2020, Form 1099-MISC was used the way Form 1099-NEC is used today — to report payroll payments made to freelancers and contractors.

This is testament to how tax forms like these are constantly subject to change. For companies managing global workforce, this presents a challenge. With multiple currencies, a medley of regulatory ecosystems, and a maze of compliance procedures, it can be difficult to create an efficient process free of human error and delayed payments.

This is where a payment distribution platform comes in. With expertise in the compliance requirements of multiple countries, and advanced technology to handle different currencies and keep track of data, a high-quality third-party platform can change the game for companies that need to deal with non-employee payments – whether it’s a one-time occurrence, or on a regular basis.