TurboTax / Tax Calculators & Tips / All Tax Guides / IRS Tax Forms / How to Read a 1099-MISC Tax Form

How to Read a 1099-MISC Tax Form

Updated for Tax Year 2016


OVERVIEW

Are you self employed? Each business or client that paid you more than $600 for the year should send you a 1099-MISC. Think of it like a W-2 for self-employed people.


If you’re self-employed, even if just for part of the year, chances are you’ll get one or more 1099-MISC forms at tax time. Each business or client that paid you more than $600 for the year should send you a 1099-MISC. Think of it like a W-2 for self-employed people. For you, Box 7: Nonemployee compensation, is the most important place to look. That’s where the amounts paid to you should be reported.

Form 1099-MISC also includes other types of payments you may need to report on your tax return. This guide will help you understand some of the key pieces of information reported on the 1099-MISC, that you’ll need when preparing your tax return.

Box 1: Rents

If someone pays you rent for office space, farmland or pasture, or machinery, this figure will be reported in Box 1. Only amounts of $600 or more are required to be reported.

Box 2: Royalties

Box 2 reports any royalties you received in excess of $10. Royalties generally cover license fees for copyrights, patents and trademarks.

Box 7: Nonemployee Compensation

The IRS considers any money you earn from an individual or business that does not officially employ you to be taxable self-employment income. The employer must report this income in box 7 of Form 1099-MISC for each person they paid more than $600 for the year. For example, if you earned money as an independent contractor, that income would be reported in Box 7.

Self-employed taxpayers generally aren’t subject to income tax withholding. In most cases, boxes 4 and 16, which report federal and state income tax withholding, will be empty. However, if you fail to provide each of your clients with a completed W-9 form that provides your taxpayer identification number, you may be subject to backup withholding.

Other 1099-MISC boxes

Box 3 covers reportable payments not specifically covered elsewhere, like prize winnings or termination payments not considered wages. The remaining boxes report specific types of payments. For example, box 5 may report some of the proceeds from the sale of fish if you’re a fisherman. Box 6 is for payments received for providing health care services, and box 9 is for proceeds from the sale of certain consumer goods. If you're stuck, the back of the form provides a brief description of the types of payments to be reported in each box.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99$34.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/1040A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected in March. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Bonus Offer with TurboTax Self-Employed: File your 2016 federal return with TurboTax Self-Employed by 4/18/17 and receive a complimentary subscription to QuickBooks Self-Employed until 4/30/18 at no additional cost. After you file your taxes, you must activate your QuickBooks Self-Employed subscription by 7/15/2017 by logging into QuickBooks Self-Employed via mobile app or at https://selfemployed.intuit.com/login. Once activated, you will have access to QuickBooks Self-Employed until 4/30/2018.
    Offer valid only for new QuickBooks Self-Employed customers.
    • When you use TurboTax Self-Employed to file your 2017 taxes, you will have the option to renew your QuickBooks Self-Employed subscription. If you do not file with TurboTax Self-Employed by 4/30/2018, your QuickBooks Self-Employed subscription will automatically renew on 5/1/2018 for another year at the then-current annual subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section.
  • Pays for itself: In order to pay for the price of TurboTax Self-Employed, you will need at least $600 in deductible business expenses. This calculation is based on the self-employment tax income rate for tax year 2016.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Expert Help, Tax Advice and SmartLook: Included with Deluxe, Premier and Self-Employed (via phone or SmartLook); not included with Federal Free Edition. Feature availability varies by device. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • TurboTax Self-Employed Expense Finder: Available only in TurboTax Self-Employed. Not available for people with certain types of expenses and tax situations including paying contractors or employees, home office or vehicle actuals, inventory, self employed health insurance or retirement, asset depreciation, sale of property or vehicles, and farm income. Some financial institutions limit the timeframe for which historical transactions may be imported by ExpenseFinder. ExpenseFinder expected late January (late February for mobile app).
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected in March. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Data Import: Imports financial data from participating companies. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2015 and higher) and QuickBooks Desktop (2011 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.