Last Updated : January 14, 2009
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Form 1099-M

Miscellaneous Income

Purpose of the form:
The taxpayer must file this form for each person to whom, the taxpayer paid during the year.

  • At least $10 in Royalties or broker payments in lieu of dividends or tax exempt interest.
  • At least $600 in rents , services , prizes and awards , other income payments , medical and health care payments , crop insurance proceeds, or cash payments for fish.
  • Any fishing boat proceeds, or
  • Gross proceeds to an attorney.

Moreover, the taxpayer can use 1099-M to report that he made direct sales of at least $5000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

The taxpayer must also file Form 1099-M for each person from whom he has withheld federal income tax under the backup withholding rules regardless of the amount of the payment.

Trade or business reporting only:
Report on form 1099-M only when payments are made in the course of his trade or business. Personal payments are not reportable.

Some payments are not required to be reported on Form 1099-M, although they may be taxable to the reciepent.payemnts for which a Form 1099-M is not required include:

  • Payments to a corporation but certain exceptions do apply.
  • Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
  • Payments of rents to real Estate agents.
  • Wages paid to employees.
  • Business travel allowances paid to employees.
  • Costs of current life insurance protection.
  • Payments to a tax exempt organization, the United States, the District of Columbia, a U.S possession or a foreign government.
  • Certain payment card transactions if a payment card organization assigned a merchant/ payee a Merchant category code indicating that reporting is not required.
  • Fees paid to informers.
  • Scholarship or fellowship grants.
  • Difficulty of care payments those are excludable from the recipient’s gross income.
  • Cancelled debts are not required to be reported on form 1099-M.
  • Employee business expense reimbursements.

Fish purchases:
If the taxpayer is in the trade or business of purchasing fish for resale , the total cash payments of $600or more paid during the year to any person who is engaged in the business of catching fish must be reported in form 1099-M.

Deceased Employee wages:
If an employee dies during the year, the employer must report the accrued wages , vacation pay , and other compensation  paid after the date of death. For more details refer instructions of form 1099-M.

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