Miscellaneous Income

2012

Department of the Treasury
Internal Revenue Service

Instructions for
Form 1099-MISC
Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New

Be sure to report each payment in the proper box
because the IRS uses this information to determine
CAUTION whether the recipient has properly reported
the payment.
Trade or business reporting only. Report on Form
1099-MISC only when payments are made in the course of your
trade or business. Personal payments are not reportable. You
are engaged in a trade or business if you operate for gain or
profit. However, nonprofit organizations are considered to be
engaged in a trade or business and are subject to these
reporting requirements. Other organizations subject to these
reporting requirements include trusts of qualified pension or
profit-sharing plans of employers, certain organizations exempt
from tax under section 501(c) or (d), farmers’ cooperatives that
are exempt from tax under section 521, and widely held fixed
investment trusts. Payments by federal, state, or local
government agencies are also reportable.
Exceptions. Some payments do not have to be reported on
Form 1099-MISC, although they may be taxable to the
recipient. Payments for which a Form 1099-MISC is not
required include all of the following.
• Generally, payments to a corporation. But see Reportable
payments to corporations, later.
• Payments for merchandise, telegrams, telephone, freight,
storage, and similar items.
• Payments of rent to real estate agents. But the real estate
agent must use Form 1099-MISC to report the rent paid over to
the property owner. See Regulations section 1.6041-1(e)(5),
Example 5, and the instructions for box 1.
• Wages paid to employees (report on Form W-2, Wage and
Tax Statement).
• Military differential wage payments made to employees while
they are on active duty in the Armed Forces or other uniformed
services (report on Form W-2).
• Business travel allowances paid to employees (may be
reportable on Form W-2).
• Cost of current life insurance protection (report on Form W-2
or Form 1099-R, Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,
etc.).
• Payments to a tax-exempt organization including tax-exempt
trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the
United States, a state, the District of Columbia, a U.S.
possession, or a foreign government.
• Payments made to or for homeowners from the HFA Hardest
Hit Fund or the Emergency Homeowners’ Loan Program or
similar state program (report on Form 1098-MA).
• Certain payment card transactions if a payment card
organization has assigned a merchant/payee a Merchant
Category Code (MCC) indicating that reporting is not required.
A cardholder/payor may rely on the MCC assigned to a
merchant/payee to determine if a payment card transaction with
that merchant/payee is subject to reporting under section 6041
or section 6041A. For more information and a list of merchant
types with corresponding MCCs, see Revenue Procedure
2004-43 available at www.irs.gov/irb/2004-31_IRB/ar17.html.
Form 1099-K. Payment settlement entities may have to
report merchant card payments and third party network
payments on Form 1099-K instead of Form 1099-MISC. See
the separate Instructions for Form 1099-K.

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Information about any future developments that affect Form
1099-MISC (such as legislation) will be posted at www.irs.gov/
form1099misc.
Truncating recipient’s identification number on paper
payee statements. Notice 2011-38 allows filers of this form to
truncate a recipient’s identification number (social security
number (SSN), individual taxpayer identification number (ITIN),
or adoption taxpayer identification number (ATIN)) on paper
payee statements for tax years 2011 and 2012. See part M in
the 2012 General Instructions for Certain Information Returns.
Repeal of reporting requirements for certain rental property
expenses. The requirement described in the 2011 instructions
for persons receiving rental income from real estate to report
payments for certain rental property expenses on Form
1099-MISC was repealed by Congress. You do not have to
report those payments on Form 1099-MISC.

Reminder
General Instructions. In addition to these specific
instructions, you should also use the 2012 General Instructions
for Certain Information Returns. Those general instructions
include information about the following topics.
• Backup withholding.
• Electronic reporting requirements.
• Penalties.
• Who must file (nominee/middleman).
• When and where to file.
• Taxpayer identification numbers.
• Statements to recipients.
• Corrected and void returns.
• Other general topics.
You can get the general instructions from IRS.gov or by
calling 1-800-TAX-FORM (1-800-829-3676).

Specific Instructions
File Form 1099-MISC, Miscellaneous Income, for each person
to whom you have paid during the year:
• At least $10 in royalties (see the instructions for box 2) or
broker payments in lieu of dividends or tax-exempt interest (see
the instructions for box 8);
• At least $600 in rents, services (including parts and
materials), prizes and awards, other income payments, medical
and health care payments, crop insurance proceeds, cash
payments for fish (or other aquatic life) you purchase from
anyone engaged in the trade or business of catching fish, or,
generally, the cash paid from a notional principal contract to an
individual, partnership, or estate;
• Any fishing boat proceeds; or
• Gross proceeds of $600 or more paid to an attorney. See
Payments to attorneys, later.
In addition, use Form 1099-MISC to report that you made
direct sales of at least $5,000 of consumer products to a buyer
for resale anywhere other than a permanent retail
establishment. You must also file Form 1099-MISC for each
person from whom you have withheld any federal income tax
Jan 13, 2012

under the backup withholding rules regardless of the amount of
the payment.

Cat. No. 27982J

Fees paid to informers. A payment to an informer as an
award, fee, or reward for information about criminal activity
does not have to be reported if the payment is made by a
federal, state, or local government agency, or by a nonprofit
organization exempt from tax under section 501(c)(3) that
makes the payment to further the charitable purpose of
lessening the burdens of government. For more information,
see Regulations section 1.6041-3(l).
Scholarships. Do not use Form 1099-MISC to report
scholarship or fellowship grants. Scholarship or fellowship
grants that are taxable to the recipient because they are paid
for teaching, research, or other services as a condition for
receiving the grant are considered wages and must be reported
on Form W-2. Other taxable scholarship or fellowship payments
(to a degree or nondegree candidate) do not have to be
reported by you to the IRS on any form. See Notice 87-31,
1987-1 C.B. 475, and Regulations section 1.6041-3(n) for
more information.
Difficulty-of-care payments. Do not use Form 1099-MISC
to report difficulty-of-care payments that are excludable from
the recipient’s gross income. Difficulty-of-care payments to
foster care providers are not reportable if paid for fewer than
11 children under age 19 and fewer than six individuals age 19
or older. Amounts paid for more than 10 children or more than
five other individuals are reportable on Form 1099-MISC.
Canceled debt. A canceled debt is not reportable on Form
1099-MISC. Canceled debts must be reported on Form 1099-C,
Cancellation of Debt, by financial institutions, credit unions,
Federal Government agencies, certain agencies connected with
the Federal Government, and an organization where the
lending of money (such as finance and credit card companies)
is a significant trade or business. See the Instructions for Forms
1099-A and 1099-C.
Reportable payments to corporations. The following
payments made to corporations generally must be reported on
Form 1099-MISC.
• Medical and health care payments reported in box 6.
• Fish purchases for cash reported in box 7.
• Attorneys’ fees reported in box 7.
• Gross proceeds paid to an attorney reported in box 14.
• Substitute payments in lieu of dividends or tax-exempt
interest reported in box 8.
• Payments by a federal executive agency for services
(vendors) reported in box 7.

required for some or all of a payment under section
6041A(a)(1). For example, a person who, in the course of a
trade or business, pays $600 of taxable damages to a claimant
by paying that amount to a claimant’s attorney is required to
furnish Form 1099-MISC to the claimant under section 6041
and furnish Form 1099-MISC to the claimant’s attorney under
section 6045(f). For more examples and exceptions relating to
payments to attorneys, see Regulations section 1.6045-5.
However, these rules do not apply to wages paid to
attorneys that are reportable on Form W-2 or to profits
distributed by a partnership to its partners that are
reportable on:
• Schedule K-1 (Form 1065), Partner’s Share of Income,
Deductions, Credits, etc., or
• Schedule K-1 (Form 1065-B), Partner’s Share of Income
(Loss) From an Electing Large Partnership.
Payments to corporations for legal services. The
exemption from reporting payments made to corporations does
not apply to payments for legal services. Therefore, you must
report attorneys’ fees (in box 7) or gross proceeds (in box 14)
as described earlier to corporations that provide legal services.
Taxpayer identification numbers (TINs). To report
payments to an attorney on Form 1099-MISC, you must obtain
the attorney’s TIN. You may use Form W-9, Request for
Taxpayer Identification Number and Certification, to obtain the
attorney’s TIN. An attorney is required to promptly supply its
TIN whether it is a corporation or other entity, but the attorney is
not required to certify its TIN. If the attorney fails to provide its
TIN, the attorney may be subject to a penalty under section
6723 and its regulations, and you must backup withhold on the
reportable payments.
Fish purchases. If you are in the trade or business of
purchasing fish for resale, you must report total cash payments
of $600 or more paid during the year to any person who is
engaged in the trade or business of catching fish. Report these
payments in box 7. You are required to keep records showing
the date and amount of each cash payment made during the
year, but you must report only the total amount paid for the year
on Form 1099-MISC.
“Fish” means all fish and other forms of aquatic life. “Cash”
means U.S. and foreign coin and currency and a cashier’s
check, bank draft, traveler’s check, or money order. Cash does
not include a check drawn on your personal or business
account.
Deceased employee’s wages. If an employee dies during the
year, you must report the accrued wages, vacation pay, and
other compensation paid after the date of death. If you made
the payment in the same year the employee died, you must
withhold social security and Medicare taxes on the payment
and report them only as social security and Medicare wages on
the employee’s Form W-2 to ensure that proper social security
and Medicare credit is received. On the Form W-2, show the
payment as social security wages (box 3) and Medicare wages
and tips (box 5) and the social security and Medicare taxes
withheld in boxes 4 and 6; do not show the payment in box 1 of
Form W-2.
If you made the payment after the year of death, do not
report it on Form W-2, and do not withhold social security and
Medicare taxes.
Whether the payment is made in the year of death or after
the year of death, you also must report the payment to the
estate or beneficiary on Form 1099-MISC. Report the payment
in box 3 (rather than in box 7 as specified in Rev. Rul. 86-109,
1986-2 C.B. 196). See the Example that follows. Enter the
name and TIN of the payment recipient on Form 1099-MISC.
For example, if the recipient is an individual beneficiary, enter
the name and social security number of the individual; if the
recipient is the estate, enter the name and employer
identification number of the estate. The general backup
withholding rules apply to this payment.
Death benefits from nonqualified deferred compensation
plans or section 457 plans paid to the estate or beneficiary of a
deceased employee are reportable on Form 1099-MISC. Do not

Federal executive agencies may also have to file Form
8596, Information Return for Federal Contracts, and
CAUTION Form 8596-A, Quarterly Transmittal of Information
Returns for Federal Contracts, if a contracted amount for
personal services is more than $25,000. See Rev. Rul.
2003-66, which is on page 1115 of Internal Revenue Bulletin
2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf for details.
Payments to attorneys. The term attorney includes a law firm
or other provider of legal services. Attorneys’ fees of $600 or
more paid in the course of your trade or business are reportable
in box 7 of Form 1099-MISC.
Gross proceeds paid to attorneys. Under section 6045(f),
report in box 14 payments that:
• Are made to an attorney in the course of your trade or
business in connection with legal services, for example, as in a
settlement agreement,
• Total $600 or more, and
• Are not reportable by you in box 7.
Generally, you are not required to report the claimant’s
attorney’s fees. For example, an insurance company pays a
claimant’s attorney $100,000 to settle a claim. The insurance
company reports the payment as gross proceeds of $100,000 in
box 14. The insurance company does not have a reporting
requirement for the claimant’s attorney’s fees subsequently paid
from these funds.
These rules apply whether or not the legal services are
provided to the payer and whether or not the attorney is
exclusive payee (for example, the attorney’s and claimant’s
names are on one check) or other information returns are

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Instructions for Form 1099-MISC (2012)

report these death benefits on Form 1099-R. However, if the
benefits are from a qualified plan, report them on Form 1099-R.
See the Instructions for Forms 1099-R and 5498.

Directors’ fees. You must report directors’ fees and other
remuneration, including payments made after retirement, on
Form 1099-MISC in the year paid. Report them in box 7.

Example. Before Employee A’s death on June 15, 2012, A
was employed by Employer X and received $10,000 in wages
on which federal income tax of $1,500 was withheld. When A
died, X owed A $2,000 in wages and $1,000 in accrued
vacation pay. The total of $3,000 (less the social security and
Medicare taxes withheld) was paid to A’s estate on July 20,
2012. Because X made the payment during the year of death, X
must withhold social security and Medicare taxes on the $3,000
payment and must complete Form W-2 as follows.
• Box 1 — 10000.00 (does not include the $3,000 accrued
wages and vacation pay)
• Box 2 — 1500.00
• Box 3 — 13000.00 (includes the $3,000 accrued wages and
vacation pay)
• Box 4 — Social security tax withheld on the amount in box 3
• Box 5 — 13000.00 (includes the $3,000 accrued wages and
vacation pay)
• Box 6 — Medicare tax withheld on the amount in box 5
Employer X also must complete Form 1099-MISC as follows.
• Boxes for recipient’s name, address, and TIN — the estate’s
name, address, and TIN.
• Box 3 — 3000.00 (Even though amounts were withheld for
social security and Medicare taxes, the gross amount is
reported here.)

Commissions paid to lottery ticket sales agents. A state
that has control over and responsibility for online and instant
lottery games must file Form 1099-MISC to report commissions
paid, whether directly or indirectly, to licensed sales agents. For
example, State X retains control over and liability for online and
instant lottery games. For online ticket sales, State X pays
commissions by allowing an agent to retain 5% of the ticket
proceeds the agent remits to State X. For instant ticket sales,
State X pays commissions by providing tickets to the agent for
5% less than the proceeds to be obtained by the agent from the
sale of those tickets. If the commissions for the year total $600
or more, they must be reported in box 7 on Form 1099-MISC.
See Rev. Rul. 92-96, 1992-2 C.B. 281.
Escrow agent; construction project. When an escrow agent
maintains owner-provided funds in an escrow account for a
construction project, performs management and oversight
functions relating to the construction project, and makes
payments for the owner and the general contractor, the escrow
agent must file Form 1099-MISC for reportable payments of
$600 or more. This requirement applies whether or not the
escrow agent is a bank. If the contractor is the borrower of the
funds, do not report on Form 1099-MISC any loan payments
made to the contractor/borrower.
Indian gaming profits, payments to tribal members. If you
make payments to members of Indian tribes from the net
revenues of class II or class III gaming activities conducted or
licensed by the tribes, you must withhold federal income tax on
such payments. File Form 1099-MISC to report the payments
and withholding to tribal members. Report the payments in box
3 and the federal income tax withheld in box 4. Pub. 15-A
contains the necessary “Tables for Withholding on Distributions
of Indian Gaming Profits to Tribal Members.”

If Employer X made the payment after the year of death, the
$3,000 would not be subject to social security and Medicare
taxes and would not be shown on Form W-2. However, the
employer would still file Form 1099-MISC.
Employee business expense reimbursements. Do not use
Form 1099-MISC to report employee business expense
reimbursements. Report payments made to employees under a
nonaccountable plan as wages on Form W-2. Generally,
payments made to employees under an accountable plan are
not reportable on Form W-2, except in certain cases when you
pay a per diem or mileage allowance. For more information, see
the Instructions for Forms W-2 and W-3; Pub. 463, Travel,
Entertainment, Gift, and Car Expenses; and Pub. 1542, Per
Diem Rates. For information on reporting employee moving
expense reimbursements on Form W-2, see the Instructions for
Forms W-2 and W-3.

State or local sales taxes. If state or local sales taxes are
imposed on the service provider and you (as the buyer) pay
them to the service provider, report them on Form 1099-MISC
as part of the reportable payment. However, if sales taxes are
imposed on you (as the buyer) and collected from you by the
service provider, do not report the sales taxes on Form
1099-MISC.
Widely held fixed investment trusts (WHFITs). Trustees and
middlemen of WHFITs must report items of gross income
attributable to a trust income holder (TIH) on the appropriate
Form 1099. A tax information statement that includes the
information provided to the IRS on Forms 1099, as well as
additional information identified in Regulations section
1.671-5(e), must be furnished to TIHs. For details, see the 2012
General Instructions for Certain Information Returns.

Independent contractor or employee. Generally, you must
report payments to independent contractors on Form
1099-MISC in box 7. See the instructions for box 7.
Section 530 of the Revenue Act of 1978 as extended by
TIP section 269(c) of P.L. 97-248 deals with the employment
tax status of independent contractors and employees.
To qualify for relief under section 530, employers must file Form
1099-MISC. Additional requirements for relief are discussed in
Rev. Proc. 85-18, 1985-1 C.B. 518. Also see Pub. 15-A,
Employer’s Supplemental Tax Guide, for special rules that may
apply to technical service specialists and test proctors and
room supervisors.

Statements to recipients. If you are required to file Form
1099-MISC, you must provide a statement to the recipient. For
more information about the requirement to furnish a statement
to each recipient, see part M in the 2012 General Instructions
for Certain Information Returns.
2nd TIN not. You may enter an “X” in this box if you were
notified by the IRS twice within 3 calendar years that the payee
provided an incorrect TIN. If you mark this box, the IRS will not
send you any further notices about this account. However, if
you received both IRS notices in the same year, or if you
received them in different years but they both related to
information returns filed for the same year, do not check the box
at this time. For purposes of the two-notices-in-3-years rule, you
are considered to have received one notice. You are not
required to send a second “B” notice upon receipt of the second
notice. See part N in the 2012 General Instructions for Certain
Information Returns for more information.

Transit passes and parking for independent contractors.
Although you cannot provide qualified transportation fringes to
independent contractors, the working condition and de minimis
fringe rules for transit passes and parking apply to independent
contractors. Tokens or farecards that enable an independent
contractor to commute on a public transit system (not including
privately operated van pools) are excludable from the
independent contractor’s gross income and are not reportable
on Form 1099-MISC if their value in any month is $21 or less.
However, if the value of a pass provided in a month is greater
than $21, the full value is includible in gross income and is
reportable on Form 1099-MISC. The value of parking may be
excludable from an independent contractor’s gross income,
and, therefore, not reportable on Form 1099-MISC if certain
requirements are met. See Regulations section 1.132-9(b),
Q/A-24.
Instructions for Form 1099-MISC (2012)

For information on the TIN Matching System offered by
TIP the IRS, see the 2012 General Instructions for Certain
Information Returns.

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Recipient’s Identification Number

Box 3. Other Income

Enter the recipient’s identification number using hyphens in the
proper format. SSNs, ITINs, and ATINs should be in the
XXX-XX-XXXX format. EINs should be in the XX-XXXXXXX
format.

Enter other income of $600 or more required to be reported on
Form 1099-MISC that is not reportable in one of the other
boxes on the form.
Also enter in box 3 prizes and awards that are not for
services performed. Include the fair market value (FMV) of
merchandise won on game shows. Also include amounts paid
to a winner of a sweepstakes not involving a wager. If a wager
is made, report the winnings on Form W-2G, Certain Gambling
Winnings.

Account Number
The account number is required if you have multiple accounts
for a recipient for whom you are filing more than one Form
1099-MISC. Additionally, the IRS encourages you to designate
an account number for all Forms 1099-MISC that you file. See
part L in the 2012 General Instructions for Certain Information
Returns.

If, not later than 60 days after the winner becomes
TIP entitled to the prize, the winner can choose the option of
a lump sum or an annuity payable over at least 10
years, the payment of winnings is considered made when
actually paid. If the winner chooses an annuity, file Form
1099-MISC each year to report the annuity paid during that
year.
Do not include prizes and awards paid to your employees.
Report these on Form W-2. Do not include in box 3 prizes and
awards for services performed by nonemployees, such as an
award for the top commission salesperson. Report them in
box 7.
Prizes and awards received in recognition of past
accomplishments in religious, charitable, scientific, artistic,
educational, literary, or civic fields are not reportable if:
• The winners are chosen without action on their part,
• The winners are not expected to perform future services, and
• The payer transfers the prize or award to a charitable
organization or governmental unit under a designation made by
the recipient. See Rev. Proc. 87-54, 1987-2 C.B. 669.
Other items required to be reported in box 3 include the
following.
1. Payments as explained earlier under Deceased
employee’s wages.
2. Payments as explained earlier under Indian gaming
profits, payments to tribal members.
3. A payment or series of payments made to individuals for
participating in a medical research study or studies.
4. Termination payments to former self-employed insurance
salespeople. These payments are not subject to
self-employment tax and are reportable in box 3 (rather than
box 7) if all the following apply.
a. The payments are received from an insurance company
because of services performed as an insurance salesperson for
the company.
b. The payments are received after termination of the
salesperson’s agreement to perform services for the company.
c. The salesperson did not perform any services for the
company after termination and before the end of the year.
d. The salesperson enters into a covenant not to compete
against the company for at least 1 year after the date of
termination.
e. The amount of the payments depends primarily on
policies sold by the salesperson or credited to the salesperson’s
account during the last year of the service agreement or to the
extent those policies remain in force for some period after
termination, or both.
f. The amount of the payments does not depend at all on
length of service or overall earnings from the company
(regardless of whether eligibility for payment depends on length
of service).
If the termination payments do not meet all these
requirements, report them in box 7.
5. Generally, all punitive damages, any damages for
nonphysical injuries or sickness, and any other taxable
damages. Report punitive damages even if they relate to
physical injury or physical sickness. Generally, report all
compensatory damages for nonphysical injuries or sickness,
such as employment discrimination or defamation. However, do
not report damages (other than punitive damages):
a. Received on account of personal physical injuries or
physical sickness;

Box 1. Rents
Enter amounts of $600 or more for all types of rents, such as
any of the following.
• Real estate rentals paid for office space. However, you do
not have to report these payments on Form 1099-MISC if you
paid them to a real estate agent. But the real estate agent must
use Form 1099-MISC to report the rent paid over to the
property owner. See Regulations section 1.6041-1(e)(5),
Example 5.
• Machine rentals (for example, renting a bulldozer to level
your parking lot). If the machine rental is part of a contract that
includes both the use of the machine and the operator, prorate
the rental between the rent of the machine (report that in box 1)
and the operator’s charge (report that as nonemployee
compensation in box 7).
• Pasture rentals (for example, farmers paying for the use of
grazing land).
Public housing agencies must report in box 1 rental
assistance payments made to owners of housing projects. See
Rev. Rul. 88-53, 1988-1 C.B. 384.
Coin-operated amusements. If an arrangement between
an owner of coin-operated amusements and an owner of a
business establishment where the amusements are placed is a
lease of the amusements or the amusement space, the owner
of the amusements or the owner of the space, whoever makes
the payments, must report the lease payments in box 1 of Form
1099-MISC if the payments total at least $600. However, if the
arrangement is a joint venture, the joint venture must file a
Form 1065, U.S. Return of Partnership Income, and provide
each partner with the information necessary to report the
partner’s share of the taxable income. Coin-operated
amusements include video games, pinball machines,
jukeboxes, pool tables, slot machines, and other machines and
gaming devices operated by coins or tokens inserted into the
machines by individual users. For more information, see Rev.
Rul. 92-49, 1992-1 C.B. 433.

Box 2. Royalties
Enter gross royalty payments (or similar amounts) of $10 or
more. Report royalties from oil, gas, or other mineral properties
before reduction for severance and other taxes that may have
been withheld and paid. Do not include surface royalties. They
should be reported in box 1. Do not report oil or gas payments
for a working interest in box 2; report payments for working
interests in box 7. Do not report timber royalties made under a
pay-as-cut contract; report these timber royalties on Form
1099-S, Proceeds From Real Estate Transactions.
Use box 2 to report royalty payments from intangible
property such as patents, copyrights, trade names, and
trademarks. Report the gross royalties (before reduction for
fees, commissions, or expenses) paid by a publisher directly to
an author or literary agent, unless the agent is a corporation.
The literary agent (whether or not a corporation) that receives
the royalty payment on behalf of the author must report the
gross amount of royalty payments to the author on Form
1099-MISC whether or not the publisher reported the payment
to the agent on its Form 1099-MISC.

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Instructions for Form 1099-MISC (2012)

Illustrated example.
The completed Form 1099-MISC illustrates the following example. Z Builders is a contractor that subcontracts drywall work to
Ronald Green, a sole proprietor who does business as Y Drywall. During the year, Z Builders pays Mr. Green $5,500. Z Builders
must file Form 1099-MISC because they paid Mr. Green $600 or more in the course of their trade or business, and Mr. Green is
not a corporation.

9595

VOID

CORRECTED

PAYER’S name, street address, city, state, ZIP code, and telephone no.

1

Z Builders
123 Maple Avenue
Oaktown, AL 00000
555-555-1212

Rents

OMB No. 1545-0115

2012

$
2

Royalties

Form

$
3

Other income

$
PAYER’S Federal identification
number

RECIPIENT’S identification
number

10-9999999

123-00-6789

5

$

RECIPIENT’S name

7

1099-MISC

4 Federal income tax withheld

$
Fishing boat proceeds

6 Medical and health care payments

$
Nonemployee compensation

8 Substitute payments in lieu of
dividends or interest

Ronald Green
dba/ Y Drywall

$
Street address (including apt. no.)

9

456 Flower Lane
City, state, and ZIP code

5500.00

$

Payer made direct sales of
10 Crop insurance proceeds
$5,000 or more of consumer
products to a buyer
(recipient) for resale 䊳
$

11

12

Oaktown, AL 00000
2nd TIN not. 13

Account number (see instructions)

Excess golden parachute 14 Gross proceeds paid to
payments
an attorney

$
15a Section 409A deferrals

$
Form

15b Section 409A income

$
1099-MISC

16

Copy A
For
Internal Revenue
Service Center
File with Form 1096.

For Privacy Act
and Paperwork
Reduction Act
Notice, see the
2012 General
Instructions for
Certain
Information
Returns

$
State tax withheld

17 State/Payer’s state no.

$
$

18 State income

$
$

Cat. No. 14425J

Department of the Treasury - Internal Revenue Service

Box 4. Federal Income Tax Withheld

b. That do not exceed the amount paid for medical care for
emotional distress;
c. Received on account of nonphysical injuries (for
example, emotional distress) under a written binding
agreement, court decree, or mediation award in effect on or
issued by September 13, 1995; or
d. That are for a replacement of capital, such as damages
paid to a buyer by a contractor who failed to complete
construction of a building.
Damages received on account of emotional distress,
including physical symptoms such as insomnia, headaches,
and stomach disorders, are not considered received for a
physical injury or physical sickness and are reportable unless
described in b or c above. However, damages received on
account of emotional distress due to physical injuries or
physical sickness are not reportable.
Also report liquidated damages received under the Age
Discrimination in Employment Act of 1967.

Enter backup withholding. For example, persons who have not
furnished their TIN to you are subject to withholding on
payments required to be reported in boxes 1, 2 (net of
severance taxes), 3, 5 (to the extent paid in cash), 6, 7 (except
fish purchases for cash), 8, 10, and 14. For more information on
backup withholding, including the rate, see part N in the 2012
General Instructions for Certain Information Returns.
Also enter any income tax withheld from payments to
members of Indian tribes from the net revenues of class II or
class III gaming activities conducted or licensed by the tribes.

Exception
Regulations section 31.3406(g)-1(f) provides that backup
withholding is not required for certain payment card
transactions.
At the time these instructions went to print, the IRS had
published proposed changes to Regulations section
CAUTION 31.3406(g)-1(f). Also, a proposed revenue procedure
was published in Notice 2007-59. For more information, go to
IRS.gov and enter “QPCA” in the upper right corner.

!

Taxable back pay damages may be wages and
TIP reportable on Form W-2. See Pub. 957, Reporting Back
Pay and Special Wage Payments to the Social Security
Administration.

Box 5. Fishing Boat Proceeds
Enter the individual’s share of all proceeds from the sale of a
catch or the FMV of a distribution in kind to each crew member
of fishing boats with normally fewer than 10 crew members. A
fishing boat has normally fewer than 10 crew members if the
average size of the operating crew was fewer than 10 on trips
during the preceding 4 calendar quarters.
In addition, report cash payments of up to $100 per trip that
are contingent on a minimum catch and are paid solely for

Foreign agricultural workers. Report in box 3 compensation
of $600 or more paid in a calendar year to an H-2A visa
agricultural worker who did not give you a valid taxpayer
identification number. You must also withhold federal income
tax under the backup withholding rules. For more information,
go to IRS.gov and enter “foreign agricultural workers” in the
search box.
Instructions for Form 1099-MISC (2012)

Miscellaneous
Income

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• Payments by attorneys to witnesses or experts in legal

additional duties (such as mate, engineer, or cook) for which
additional cash payments are traditional in the industry.
However, do not report on Form 1099-MISC any wages
reportable on Form W-2.

adjudication.
• Payment for services, including payment for parts or
materials used to perform the services if supplying the parts or
materials was incidental to providing the service. For example,
report the total insurance company payments to an auto repair
shop under a repair contract showing an amount for labor and
another amount for parts, if furnishing parts was incidental to
repairing the auto.
• Commissions paid to nonemployee salespersons that are
subject to repayment but not repaid during the calendar year.
• A fee paid to a nonemployee, including an independent
contractor, or travel reimbursement for which the nonemployee
did not account to the payer, if the fee and reimbursement total
at least $600. To help you determine whether someone is an
independent contractor or an employee, see Pub. 15-A.
• Payments to nonemployee entertainers for services. Use
Form 1042-S, Foreign Person’s U.S. Source Income Subject to
Withholding, for payments to nonresident aliens.
• Exchanges of services between individuals in the course of
their trades or businesses. For example, an attorney represents
a painter for nonpayment of business debts in exchange for the
painting of the attorney’s law offices. The amount reportable by
each on Form 1099-MISC is the FMV of his or her own services
performed. However, if the attorney represents the painter in a
divorce proceeding, this is an activity that is unrelated to the
painter’s trade or business. The attorney must report on Form
1099-MISC the value of his or her services. But the painter
need not report on Form 1099-MISC the value of painting the
law offices because the work is in exchange for legal services
that are separate from the painter’s business.
• Taxable fringe benefits for nonemployees. For information on
the valuation of fringe benefits, see Pub. 15-B, Employer’s Tax
Guide to Fringe Benefits.
• Gross oil and gas payments for a working interest.
• Payments to an insurance salesperson who is not your
common law or statutory employee. See Pub. 15-A for the
definition of employee. However, for termination payments to
former insurance salespeople, see the instructions for box 3.
• Directors’ fees as explained under Directors’ fees, earlier.
• Commissions paid to licensed lottery ticket sales agents as
explained under Commissions paid to lottery ticket sales
agents, earlier.
• Payments to section 530 (of the Revenue Act of 1978)
workers. See the TIP under Independent contractor or
employee, earlier.
• Fish purchases for cash. See Fish purchases, earlier.

Box 6. Medical and Health Care Payments
Enter payments of $600 or more made in the course of your
trade or business to each physician or other supplier or provider
of medical or health care services. Include payments made by
medical and health care insurers under health, accident, and
sickness insurance programs. If payment is made to a
corporation, list the corporation as the recipient rather than the
individual providing the services. Payments to persons
providing health care services often include charges for
injections, drugs, dentures, and similar items. In these cases
the entire payment is subject to information reporting. You are
not required to report payments to pharmacies for prescription
drugs.
The exemption from issuing Form 1099-MISC to a
corporation does not apply to payments for medical or health
care services provided by corporations, including professional
corporations. However, you are not required to report payments
made to a tax-exempt hospital or extended care facility or to a
hospital or extended care facility owned and operated by the
United States (or its possessions), a state, the District of
Columbia, or any of their political subdivisions, agencies, or
instrumentalities.
Generally, payments made under a flexible spending
arrangement (as defined in section 106(c)(2)) or a
CAUTION health reimbursement arrangement which is treated as
employer-provided coverage under an accident or health plan
for purposes of section 106 are exempt from the reporting
requirements of section 6041.

!

Box 7. Nonemployee Compensation
Enter nonemployee compensation of $600 or more. Include
fees, commissions, prizes and awards for services performed
as a nonemployee, other forms of compensation for services
performed for your trade or business by an individual who is not
your employee, and fish purchases for cash. Include oil and gas
payments for a working interest, whether or not services are
performed. Also include expenses incurred for the use of an
entertainment facility that you treat as compensation to a
nonemployee. Federal executive agencies that make payments
to vendors for services, including payments to corporations,
must report the payments in this box. See Rev. Rul. 2003-66,
which is on page 1115 of Internal Revenue Bulletin 2003-26 at
www.irs.gov/pub/irs-irbs/irb03-26.pdf.
What is nonemployee compensation? If the following four
conditions are met, you must generally report a payment as
nonemployee compensation.
• You made the payment to someone who is not your
employee;
• You made the payment for services in the course of your
trade or business (including government agencies and nonprofit
organizations);
• You made the payment to an individual, partnership, estate,
or, in some cases, a corporation; and
• You made payments to the payee of at least $600 during
the year.
Self-employment tax. Generally, amounts reportable in box 7
are subject to self-employment tax. If payments to individuals
are not subject to this tax and are not reportable elsewhere on
Form 1099-MISC, report the payments in box 3. However,
report section 530 (of the Revenue Act of 1978) worker
payments in box 7.
Examples. The following are some examples of payments to
be reported in box 7.
• Professional service fees, such as fees to attorneys
(including corporations), accountants, architects, contractors,
engineers, etc.
• Fees paid by one professional to another, such as
fee-splitting or referral fees.

Nonqualified deferred compensation (Section 409A)
income. Include in box 7 the amount of all deferrals (plus
earnings) reported in box 15b that are includible in gross
income because the nonqualified deferred compensation
(NQDC) plan fails to satisfy the requirements of section 409A.
See Regulations sections 1.409A-1 through 1.409A-6.
Golden parachute payments. A parachute payment is any
payment that meets all of the following conditions.
1. The payment is in the nature of compensation.
2. The payment is to, or for the benefit of, a disqualified
individual.
3. The payment is contingent on a change in the ownership
of a corporation, the effective control of a corporation, or the
ownership of a substantial portion of the assets of a corporation
(a change in ownership or control).
4. The payment has (together with other payments
described in 1, 2, and 3, above, made to the same individual)
an aggregate present value of at least three times the
individual’s base amount.
A disqualified individual is one who at any time during the
12-month period prior to and ending on the date of the change
in ownership or control of the corporation (the disqualified
individual determination period) was an employee or
independent contractor and was, in regard to that corporation, a
shareholder, an officer, or a highly compensated individual.

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Instructions for Form 1099-MISC (2012)

Boxes 11 and 12. Reserved

For more details, see Regulations section 1.280G-1. Also,
see Rev. Proc. 2003-68, which is on page 398 of Internal
Revenue Bulletin 2003-34 at www.irs.gov/pub/irs-irbs/irb03-34.
pdf, concerning the valuation of stock options for purposes of
golden parachute payment rules. For the treatment of unvested
shares of restricted stock, see Rev. Rul. 2005-39, available at
www.irs.gov/irb/2005-27_IRB/ar08.html.

Make no entries in these boxes.

Box 13. Excess Golden Parachute Payments
Enter any excess golden parachute payments. An excess
parachute payment is the amount of the excess of any
parachute payment over the base amount (the average annual
compensation for services includible in the individual’s gross
income over the most recent 5 tax years). See Q/A-38 through
Q/A-44 of Regulations section 1.280G-1 for how to compute the
excess amount.
See Golden parachute payments, earlier, for more
information.

Independent contractor. Enter in box 7 the total
compensation, including any golden parachute payment. For
excess golden parachute payments, see the box 13 reporting
instructions.
For employee reporting of these payments, see Pub. 15-A.
Payments not reported in box 7. Do not report in box 7, nor
elsewhere on Form 1099-MISC, the cost of current life
insurance protection (report on Form W-2 or Form 1099-R); an
employee’s wages, travel or auto allowance, or bonuses (report
on Form W-2); or the cost of group-term life insurance paid on
behalf of a former employee (report on Form W-2).

Box 14. Gross Proceeds Paid to an Attorney
Enter gross proceeds of $600 or more paid to an attorney in
connection with legal services (regardless of whether the
services are performed for the payer). See Payments to
attorneys, earlier.

Box 15a. Section 409A Deferrals

Box 8. Substitute Payments in Lieu of Dividends
or Interest

You do not have to complete this box. For details, see Notice
2008-115, available at www.irs.gov/irb/2008-52_IRB/ar10.html.
If you complete this box, enter the total amount deferred
during the year of at least $600 for the nonemployee under all
nonqualified plans. The deferrals during the year include
earnings on the current year and prior year deferrals. For
additional information, see Regulations sections 1.409A-1
through 1.409A-6.
For deferrals and earnings under NQDC plans for
employees, see the Instructions for Forms W-2 and W-3.

Enter aggregate payments of at least $10 received by a broker
for a customer in lieu of dividends or tax-exempt interest as a
result of a loan of a customer’s securities. For this purpose, a
customer includes an individual, trust, estate, partnership,
association, company, or corporation. See Notice 2003-67,
which is on page 752 of Internal Revenue Bulletin 2003-40 at
www.irs.gov/pub/irs-irbs/irb03-40.pdf. It does not include a
tax-exempt organization, the United States, any state, the
District of Columbia, a U.S. possession, or a foreign
government. File Form 1099-MISC with the IRS and furnish a
copy to the customer for whom you received the payment. Also,
file Form 1099-MISC for and furnish a copy to an individual for
whom you received a payment in lieu of tax-exempt interest.

Box 15b. Section 409A Income
Enter all amounts deferred (including earnings on amounts
deferred) that are includible in income under section 409A
because the NQDC plan fails to satisfy the requirements of
section 409A. Do not include amounts properly reported on a
Form 1099-MISC, corrected Form 1099-MISC, Form W-2, or
Form W-2c for a prior year. Also, do not include amounts that
are considered to be subject to a substantial risk of forfeiture for
purposes of section 409A. For additional information, see
Regulations sections 1.409A-1 through 1.409A-6; Notice
2008-113, available at www.irs.gov/irb/2008-51_IRB/ar12.html;
Notice 2008-115; Notice 2010-6, which is available at www.irs.
gov/irb/2010-03_IRB/ar08.html; and Notice 2010-80, available
at www.irs.gov/irb/2010-51_IRB/ar08.html.
The amount included in box 15b is also includible in box 7.

Substitute payment means a payment in lieu of (a) a
dividend or (b) tax-exempt interest to the extent that interest
(including OID) has accrued while the securities were on loan.

Box 9. Payer Made Direct Sales of $5,000 or
More
Enter an “X” in the checkbox for sales by you of $5,000 or more
of consumer products to a person on a buy-sell,
deposit-commission, or other commission basis for resale (by
the buyer or any other person) anywhere other than in a
permanent retail establishment. Do not enter a dollar amount in
this box.

Boxes 16–18. State Information
These boxes, and Copies 1 and 2, are provided for your
convenience only and need not be completed for the IRS. Use
the state information boxes to report payments for up to two
states. Keep the information for each state separated by the
dash line. If you withheld state income tax on this payment, you
may enter it in box 16. In box 17, enter the abbreviated name of
the state and the payer’s state identification number. The state
number is the payer’s identification number assigned by the
individual state. In box 18, you may enter the amount of the
state payment. Use Copy 1 to provide information to the state
tax department. Give Copy 2 to the recipient for use in filing the
recipient’s state income tax return.

If you are reporting an amount in box 7, you may also check
box 9 on the same Form 1099-MISC.
The report you must give to the recipient for these direct
sales need not be made on the official form. It may be in the
form of a letter showing this information along with
commissions, prizes, awards, etc.

Box 10. Crop Insurance Proceeds
Enter crop insurance proceeds of $600 or more paid to farmers
by insurance companies unless the farmer has informed the
insurance company that expenses have been capitalized under
section 278, 263A, or 447.

Instructions for Form 1099-MISC (2012)

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Index

A
Agricultural workers, foreign . . . . . . . . . . . 5
Armed Forces . . . . . . . . . . . . . . . . . . . . . . . . . 1
Attorneys’ fees and gross
proceeds . . . . . . . . . . . . . . . . . . . . . . . 2, 6, 7
B
Backup withholding . . . . . . . . . . . . . . . . . . 2, 5
Broker transactions . . . . . . . . . . . . . . . . . . 1, 7
C
Canceled debt . . . . . . . . . . . . . . . . . . . . . . . . . 2
Coin-operated amusements . . . . . . . . . . . . 4
Commissions . . . . . . . . . . . . . . . . . . . . . . . . 3, 6
Construction project, escrow agent . . . . . 3
Consumer products of $5,000, indicator
for . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Corporations, payments to . . . . . . . . . . . 2, 6
Crop insurance proceeds . . . . . . . . . . . . 1, 7
D
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Deceased employee’s wages . . . . . . . . 2, 5
Difficulty-of-care payments . . . . . . . . . . . . . 2
Direct sales of consumer products for
resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Directors’ fees . . . . . . . . . . . . . . . . . . . . . . . 3, 6
E
Excess golden parachute payments . . . . 7
Exchange of services . . . . . . . . . . . . . . . . . . 6
F
Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 3, 6
Fish purchases for cash . . . . . . . . . . 2, 5, 6
Fishing boat proceeds . . . . . . . . . . . . . . . . . 5
Foreign agricultural workers . . . . . . . . . . . . 5
Form 1099-K . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Form W-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Former insurance salesperson,
termination payments . . . . . . . . . . . 4, 5, 6
G
Golden parachute payments . . . . . . . . . . . 6
Gross proceeds, attorneys . . . . . . . . 2, 6, 7
H
Health care services, payments . . . . . 1, 2,
6
I
Independent contractor payments . . . . . 3,
6
Indian gaming profits . . . . . . . . . . . . . . . . . . 3
Informants, fees . . . . . . . . . . . . . . . . . . . . . . . 2
L
Lottery ticket agents, commissions . . . . 3,
6
M
Medical payments . . . . . . . . . . . . . . . . . . . . .
Medical research payments . . . . . . . . . . . .
Medical services payments . . . . . . . . . . . .
Military differential payments . . . . . . . . . . .
Miscellaneous income . . . . . . . . . . . . . . . . .

2
4
6
1
1

N
Nonemployee compensation . . . . . . . . . . . 6
Nonqualified deferred
compensation . . . . . . . . . . . . . . . . . . . . . 6, 7
O
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Payment card transactions . . . . . . . . . . . 1, 5
Prizes and awards . . . . . . . . . . . . . . . . . . . . . 4
Punitive damages . . . . . . . . . . . . . . . . . . . . . 4
Q
Qualified payment card agents
(QPCAs) . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
R
Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
S
Scholarships . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 409A deferrals . . . . . . . . . . . . . . . . . 7
Section 409A income . . . . . . . . . . . . . . . . 6, 7
Section 530 worker . . . . . . . . . . . . . . . . . . 3, 6
Self-employment tax . . . . . . . . . . . . . . . . . . . 6
State and local sales taxes . . . . . . . . . . . . . 3
Statements to recipients . . . . . . . . . . . . . . . 3
Substitute payments in lieu of dividends
or tax-exempt interest . . . . . . . . . . . . . 1, 7
T
Taxpayer identification number . . . . . . . 2, 3
Termination payments, insurance
salespeople . . . . . . . . . . . . . . . . . . . . . . . 4, 6
Trade or business . . . . . . . . . . . . . . . . . . . . . 1
Transit passes . . . . . . . . . . . . . . . . . . . . . . . . . 3
W
Withholding:
Backup . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 5
Indian gaming . . . . . . . . . . . . . . . . . . . . . 3, 5

■

P
Parking, value of . . . . . . . . . . . . . . . . . . . . . . . 3

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Instructions for Form 1099-MISC (2012)