The money you dole out at your business doesn’t just go toward employee wages. You might make certain payments to vendors, like rental payments for office space. When you make payments like these, you need to report them as miscellaneous information (formerly miscellaneous income). What is miscellaneous information?
What is miscellaneous information?
Miscellaneous information includes certain payments you make outside of typical employee wages. These payments are not reported on Form W-2. Prior to 2021, these types of payments were called miscellaneous income.
There are many forms of payment that are considered IRS miscellaneous information. Take a look at some miscellaneous information examples:
- Rent payments: If you rent a physical location for your business and you do not pay a real estate agent, the payments are considered miscellaneous.
- Royalties: Payments made to someone for the use of property, like patents, are considered miscellaneous information. For example, if you are a franchisee, you pay royalties to the franchisor.
- Prizes and awards: Money you pay in prizes and awards for independent contractor services, or prizes and awards that are not for services performed (i.e., sweepstakes) are miscellaneous.
- Other income payments: This type of miscellaneous information can include prizes and awards or any other type of required reporting, like a deceased employee’s wages paid to a beneficiary.
- Medical and health care payments: If you offer benefits at your business and pay health care providers for health, accident, and sickness insurance programs, it is miscellaneous.
- Crop insurance proceeds: If you are a farmer, rancher, or operate a similar business, you might have crop insurance. Payments to insurance companies for crop insurance are considered miscellaneous.
- Fish purchases paid in cash for resale: If you purchased fish with cash from someone for resale, it is miscellaneous information.
- Gross proceeds to an attorney: Payments made to an attorney in connection with legal services, but not for the attorney’s services, are included as miscellaneous.
Keep in mind that nonemployee compensation paid to contractors is not considered miscellaneous.
How to report miscellaneous information
As a business owner, you must report miscellaneous payments you have made on the 1099-MISC tax form. On Form 1099-MISC, include the amount you paid for each type of miscellaneous information that exceeds $600. If you paid royalties, report amounts over $10.
You will enter information like the name, address, and identification number of the person you made the payment to on Form 1099-MISC. And, you must include your information. Then, you will enter the amount of miscellaneous payments in the appropriate box.
Miscellaneous information is categorized by box:
|Box 3||Other income|
|Box 4||Federal income tax withheld|
|Box 5||Fishing boat proceeds|
|Box 6||Medical and health care payments|
|Box 7||Direct sales totaling $5,000 or more of consumer products 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||Excess golden parachute payments|
|Box 14||Nonqualified deferred compensation|
After reporting miscellaneous payments on Form 1099-MISC, you must distribute it to the appropriate parties:
- Copy A: IRS
- Copy 1: State tax department (if applicable)
- Copy B: Recipient
- Copy 2: Recipient (to be filed with their state income tax return)
- Copy C: Your records
Individuals receiving Form 1099-MISC use it to report their miscellaneous earnings on their federal tax returns. Along with the above examples of miscellaneous payments, people must also report gambling proceeds and barter exchanges.
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This article has been updated from its original publish date of July 17, 2013.
This is not intended as legal advice; for more information, please click here.