What Are the Bases for a 1099-MISC?

By Business & Finance Last updated Wednesday, January/15/2025

1099s

In general, 1099s report your earnings from sources other than full- or part-time employment. Employment earnings are reported on Form W-2. Depending on the source of your other earnings, payers use different versions of 1099s to report income to the federal government and the IRS. Unlike W-2 forms, you do not attach copies of any 1099s you receive to your federal tax returns. You will receive an original and a copy from the payers.

A payer must issue a 1099-MISC to you if you made at least $10 in royalties or $600 in rents or payment for services during a calendar year. Personal payments are not eligible for reporting. This form is for trade or business reporting purposes. For example, if you used freelance writers to author copy for your business website and paid over $600 during the year to a freelancer, you must prepare and send a 1099-MISC to the independent contractor (author). Similarly, if you rented space for another for your business, you should send the landlord a 1099-MISC.

If you were paid monies as a contract employee or freelancer during the year, you are legally an independent contractor. These people form a primary basis for 100-MISC forms and reporting necessities. Independent contractors include anyone that performs services for a company for which they are paid. If an employer exercises the power to control your work hours, your activities and/or attendance on a long-term basis, you may legally be an employee. However, if you perform work on a project-type basis, and do so on your schedule, you are an independent contractor and contribute to the bases for receiving a 1099-MISC.

When you collect rents or royalties (patents, books, residual income, etc.), you generate a basis for a receiving a 1099-MISC from the person or organization that pays you. Some payments, however, do not require 1099s. These include payments to a corporation, for merchandise, to real estate agents, for employee wages, active duty military differential wage payments or business travel allowances -- even if the income is taxable to the recipient.