Form 1099-MISC: Understanding the Boxes & Descriptions on Your Tax Form

IRS 1099 forms create a record that a person or an entity other than your employer paid you or gave you some form of compensation in exchange for goods or services. They're a series of documents used to report various types of income that a person may receive other than salary or wages.

Form 1099-DIV reports dividend income from investments, especially stocks. Form 1099-INT records interest received from investments such as bonds and certificates of deposit. Form 1099-C is unique in that it records an event that may increase your taxable income because a creditor has canceled a debt you owe.

Form 1099-MISC is a specific variation of IRS Form 1099 that is used to report various types of miscellaneous income that aren't covered by other 1099 forms. It is only used for payments made in the normal course of a trade or business.

The reporting of nonemployee compensation, such as payments made to independent contractors, has been removed from Form 1099-MISC and is now reported on Form 1099-NEC as non-employee compensation.

IRS Form 1099-MISC

​**Box**​ ​**Description**​

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

Payer made direct sales of​ $5,000 or more​ of consumer products to a buyer (recipient) for resale

Box 8

Substitute payments in lieu of dividends or interest

Box 9

Crop insurance proceeds

Box 10

Gross proceeds paid to an attorney

Box 11

Fish purchased for resale

Box 12

Section 409A deferrals

Box 13

FACTA filing requirement

Box 14

Excess golden parachute payments

Box 15

Nonqualified deferred compensation

Box 16

State tax withheld

Box 17

State/Payer's state no.

Box 18

State income

Let's take a look at what types of income these boxes on Form 1099-MISC cover.

Box 1: Rents

The most common use for the rents box is payment for the rent of office space. But you don't report rent payments if they were made to a property manager or to a real estate agent. Rent would only be reported if it's paid directly to the property owner.

Another type of rent is the cost of renting machines on a temporary basis as part of your business activities. If you're a contractor and you lease a bulldozer for grading a parking lot, you're leasing the equipment for your business and you would file a Form 1099-MISC. Rent for use of farmland for grazing is another example of income that would be reported in this box.

You would not file a 1099 if you hire a backhoe and operator to excavate for a pool in your backyard.

Box 2: Royalties

Royalty payments of ​at least​ ​$10​ from investments in oil, gas and other mineral properties are reported in Form 1099-MISC Box 2. This box would also record royalty payments from intangible properties such as patents, trademarks, trade names and copyrights.

Form 1099-MISC is a specific variation of IRS Form 1099 that is used to report various types of miscellaneous income not covered by other 1099 forms.

Box 3: Other Income

The other income box is used for income over ​$600​ that isn't reported in one of the other boxes. A few examples are:

  • Fair market value of prizes and merchandise won on game shows
  • Compensation paid to H-2A visa agricultural workers without valid TINs
  • Punitive damages awarded for physical and nonphysical injuries or sickness
  • Payments to participants in medical research studies

Box 4: Federal Income Tax Withheld

You're required to enter the amount of backup withholding in Box 4, even for amounts less than ​$600​, if you've made payments reported in boxes 1, 2, 3, 5, 6, 8, 9 or 10 to someone who has not given you a Taxpayer Identification Number or TIN.

Box 5: Fishing Boat Proceeds

Box 5 is for fishing boats with fewer than 10 crew members. It's for each individual’s share at fair market value from the sale of a catch. This box would also include any cash payments up to ​$100​ per trip made contingent on the terms of a minimum catch.

Box 6: Medical and Health Care Payments

Enter payments made to physicians or to other suppliers of other health services in the course of your trade or business. You would also record payments made by insurance companies per health and accident programs in this box.

Box 7: Direct Sales to a Buyer for Resale

This box only gets an “X” if you made sales of ​$5,000​ or more in consumer products to another person, not a permanent retail establishment, on a commission basis or a buy-sell agreement for resale. This box does not require a dollar amount. You can send the details of these sales to the recipient in a letter along with any commission or awards.

Box 8: Payments in Lieu of Dividends or Interest

These are payments of ​$10​ or more made to a broker on behalf of a customer instead of dividends or tax-exempt interest arising from a loan of the customer’s securities.

Box 9: Crop Insurance Proceeds

The amount that an insurance company pays to a farmer as a result of crop damage is entered in Box 9.

Box 10: Gross Proceeds Paid to an Attorney

These are payments made to attorneys from the gross proceeds of a settlement agreement, such as the awards from a lawsuit or an insurance company making a payment as settlement of a claim. These do not include payments to attorneys for legal services provided in the normal course of business transactions.

Box 11: Fish Purchased for Resale

This box is used for payments made of ​$600 or more​ to anyone who's in the trade or business of catching fish. You need only complete this box if you're in the trade or business of selling the catch you purchased.

Box 12: Section 409A Deferrals

Entries in this box are guided by IRS Notice 2008-115, Reporting and Wage Withholding Under Internal Revenue Code #409A.

Box 13: FACTA Filing Requirement

This is another box that you simply have to check if you’re reporting information on a Form 1099 because you’re required to report payments from a U.S. account for the purposes of chapter 4 of the Internal Revenue Code. You would also check this box if you’re an FFI reporting payments to a U.S. account pursuant to an election described in Regulations section 1.1471-4(d)(5) (i)(A), or an FFI making the election described in Regulations section 1.1471-4(d)(5)(i) (A). You may want to consult with a tax professional to find out if this box applies to payments you’ve made because this is a complex area of the U.S. tax code.

Box 14: Excess Golden Parachute Payments

Record excess golden parachute payments in Box 13. "Excess" is defined as the amount over an individual’s average annual compensation recorded as gross income for the most recent five tax years. IRS Regulations section 1.409A-1 provides more details.

Box 15: Nonqualified Deferred compensation

Enter any deferred amounts that should be included in income per section 409A because the nonqualified deferred compensation plan does not meet the requirements of section 409A. See IRS Regulations sections 1.409A-1 through 1.409A-6, Notice 2008-113 for more information.

Boxes 16 Through 18: State Tax Information

These boxes report state taxes withheld, your state identification number and the amount of income earned in the state.

Form 1099-MISC Has Changed

The IRS has redesigned form 1099-MISC for tax years beginning in 2020. These boxes apply only to the most current version of the form which was updated in January 2022.

The reporting of nonemployee compensation, such as payments made to independent contractors, has been removed from Form 1099-MISC and is now reported on Form 1099-NEC as non-employee compensation.

The deadline for filing Form 1099-MISC is ​Feb. 28​ of the year after the tax year. You have until ​March 31​ if you file electronically.