Form 1099 MISC Explained

1. Introduction
2. What’s New - The Law 00:01:12
3. What’s New - Big 1099/W-2 E-Filing Changes Are In The Works 00:09:20
4. What’s New: Form 1099-NEC - Reportable Payments 00:23:14
5. 1099-NEC 00:27:32
6. 1099-NEC - Expense Reimbursements 00:28:53
7. 1099-NEC/July 2025Fringe Benefits Updates 00:30:11
8. What’s New: Form 1099-MISC 00:38:27
9. 1099-MISC 00:44:20
10. 1099-MISC Box One 00:46:02
11. 1099-MISC Box One - Special Form 1099-S 00:47:52
12. 1099-MISC Box Two 00:48:45
13. 1099-MISC Box Three 00:50:23
14. 1099-MISC Box Three - Settlement Payments 00:51:47
15. 1099-MISC Box Four 00:56:14
16. 1099-MISC Box Six 00:58:18
17. 1099-MISC vs. 1099-NEC Director’s Payments 00:59:22
18. The “Other 1099’s”: The 1099-K 01:02:34
19. Form 1099-K: Expect Changes in 2025 01:05:22
20. The W-9 01:06:34
21. The W-9: Name and TIN “Cheat Sheet 01:09:09
22. The W-9: Name and TIN “Cheat Sheet Cont’d 01:09:21
23. The W-9 - When to Get an Updated Form W-9 01:11:04
24. The W-9 - Payee Refuses to Provide a TIN 01:12:06
25. Validating Data - Identifying Your Payee: How to Know Who’s Who 01:12:27
26. Validating Data - U.S. Persons 01:12:37
27. Validating Data - W-9 Red Flags for Non-U.S. Payees 01:12:45
28. Validating Data – Problem Payee / U.S. Corporations 01:12:52
29. Validating Data – LLC Reminders - The LLC 01:13:40
30. Validating Data – LLC Reminders - The LLC as the Disregarded Entity 01:13:56
31. Validating Data – The Exempt Organization - Tax Exempt Organization Search Tool 01:14:16
32. Validating Payee Data –TIN Match Program - IRS TIN Match Program 01:15:27
33. Validating Payee Data –TIN Match Program - Using The Tool 01:15:28
34. Validating Payee Data –TIN Match Program - Delegated Authority 01:16:19
35. Watch Out For The Middleman 01:18:29
36. B-Notice Response Best Practices - Reasons For B-Notice 01:19:06
37. B-Notice Response Best Practices - IRS Matches 01:22:22
38. B-Notice Response Best Practices - 1st Notice 01:23:41
39. B-Notice Response Best Practices - 2nd Notice 01:25:41
40. B-Notice Response Best Practices - Final B-Notice Thoughts 01:27:56
41. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Penalties 01:29:30
42. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Responding 01:31:25
43. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - The Law 01:31:24
44. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Prepare 972-CG 01:33:34
45. Protect Yourself 01:36:16
46. Attendee Questions 01:37:07
47. Presentation Closing 01:40:19

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  Steven Mercatante

  Steven Mercatante is the principal and founder of TIR Consulting, LLC. He is a nationally recognized leader in tax reporting education and consulting on specialized compliance issues. He has conducted on-site consultation for corporate clients from across the world and led countless seminars and web [...]

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• Accountable Plan 00:02:02, 00:29:17, 01:08:59
• Artificial Intelligence (AI) 00:06:53
• Audit 00:05:00, 01:12:38
• Backup Withholding 00:04:48, 00:24:46, 00:26:05, 00:39:59, 00:56:20, 01:19:35, 01:33:33:07
• B-Notice 01:19:18, 01:28:12
• ChatGPT 00:06:59
• CP-2100 01:19:29
• CP-2100-A 01:19:49
• DBA -Doing Business As 01:07:07
• De Minimis 00:30:54
• Disregarded Entity 01:07:20
• EIN 01:09:36, 01:14:01
• Exempt 00:48:42, 01:14:20
• Expense Reimbursements 00:29:03
• Expenses 00:29:41
• Fair Market Value (FMV) 00:50:48
• FATCA 00:44:20, 01:08:09
• FIRE - File Information Returns Electronically 00:09:53, 00:14:48
• Form 1042 00:11:13
• Form 1042-S 01:07:45
• Form 1099-B 01:05:30
• Form 1099-DA  01:05:28
• Form 1099-DIV 01:19:06
• Form 1099-INT 01:19:06
• Form 1099-K 01:02:35
• Form 1099-MISC 00:01:05, 00:08:57, 00:22:36, 00:38:29, 00:50:25, 00:58:22
• Form 1099-NEC 00:22:36, 00:24:10, 00:27:32, 00:38:34, 0:44:33, 00:51:08, 00:55:05
• Form 1099-R 01:05:31
• Form 1099-S 00:48:02
• Form 945 00:57:56
• Form 990 01:14:16
• Form W-2 00:50:23
• Form W-8 01:07:44
• Form W-9 01:06:36, 01:07:32, 01:21:09, 01:25:27
• Fringe Benefits 00:29:01, 00:32:08
• Golden Parachute Payments 00:27:32, 00:44:38
• Independent Contractor 00:24:17, 00:29:24
• Information Returns Intake System (IRIS) 00:10:30, 0:12:51, 00:19:40
• Intangible Personal Property 0049:41
• Intellectual Property (IP) 00:49:44
• IRC Sec. 6109(a)(2)  00:09:04, 01:32:59
• IRC Section 127 00:34:41
• IRC Section 274 00:34:22
• IRC Section 3406(a) 00:09:07, 00:40:17, 00:56:23, 01:19:22, 01:33:04
• IRC Section 409A 01:00:20
• IRC Section 6041(a) 00:09:00, 00:25:48, 00:41:55, 01:33:02
• IRC Section 6045 00:43:18, 00: 55:21
• IRC Section 672101:32:48
• IRC Section 6722 01:32:50
• IRC Section 6724 01:32:52
• IRC Section 70433 00:39:45, 00:42:03
• IRS Notice 972CG 01:29:46
• ITIN 01:12:45
• Limited Liability Company (LLC) 00:47:20, 01:07:19, 01:11:49, 01:13:46
• Nonqualified Deferred Compensation (NQDC) 01:00:25
• Personal Property 00:46:02
• Real Property 00:46:02
• Reasonable Cause 00:58:15, 01:32:55
• Sole Proprietor 01:07:19, 01:11:38
• Tarriff 00:03:21
• Tax Cuts and Jobs Act 00:32:20
• Tax Exempt Organization Search Tool 01:15:21
• Tax Gap 00:02:23
• TIN 00:56:30, 01:06:44, 01z:09:12
• TIN Match Program 01:15:38, 01:28:03
• Transaction 01:18:33
• Transmitter Control Code (TCC) 00:11:22, 00:12:55
• Vendor 00:08:38, 01:08:45, 01:25:47

Accountable Plan: An accountable plan is a plan that follows the Internal Revenue Service (IRS) regulations for reimbursing workers for business expenses in which reimbursement is not counted as income. ... However, these expenses must be business-related to fall under an accountable plan.

Artificial Intelligence (AI): Artificial intelligence is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans or animals.

Audit: A formal examination of an organization's or individual's accounts or financial situation

B-Notice: A notice from the IRS stating that one or more tax ID numbers were missing from a 1099 or do not match the IRS records.

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

CP-2100: It is a notice that tells a payer that he or she may be responsible for backup withholding. It is accompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

CP2100-A: It is a notice that tells a payer that he or she may be responsible for backup withholding. It isaccompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

ChatGPT: ChatGPT, which stands for Chat Generative Pre-trained Transformer, is a large language model-based chatbot developed by OpenAI and launched on November 30, 2022, notable for enabling users to refine and steer a conversation towards a desired length, format, style, level of detail, and language used.

DBA -Doing Business As: Sometimes it makes sense for a company to do business under a different name. To do this, the company has to file what's known as a DBA, meaning "doing business as." A DBA is also known as a "fictitious business name," "trade name," or "assumed name."

De Minimis: Too trivial or minor to merit consideration.

Disregarded Entity: A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner. A single-member LLC ( “SMLLC”), for example, is considered to be a disregarded entity. (www.pntax.com)

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

Exempt : Exempt employee is a term that refers to a category of employees set out in the Fair Labor Standards Act. They do not receive overtime pay, nor do they qualify for the minimum wage

Expense: Offset (an item of expenditure) as an expense against taxable income.

Expense Reimbursement: Expense reimbursement is a method for paying employees back when they spend their own money on business-related expenses. These expenses generally occur when an employee is traveling for business but can occur in other work-related situations. (www.thebalancecareers.com)

FIRE - File Information Returns Electronically: The IRS FIRE system is the electronic network used to accept and process most types of filing forms. Technically, it stands for File Information Returns Electronically.

Fair Market Value (FMV): The term fair market value is used throughout the Internal Revenue Code among other federal statutory laws in the USA including Bankruptcy, many state laws, and several regulatory bodies. In litigation in many jurisdictions in the United States, the fair market value is determined at a hearing.

Form 1042: Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 1099-B: Proceeds From Broker and Barter Exchange Transactions is an Internal Revenue Service (IRS) tax form that is issued by brokers or barter exchanges. The form lists the gains or losses of all broker or barter exchange transactions.

Form 1099-DIV : Form 1099-DIV: Dividends and Distributions is an Internal Revenue Service (IRS) form sent to investors who receive distributions from any type of investment during a calendar year. Investors can receive multiple 1099-DIVs. Each Form 1099-DIV should be reported on an investor's tax filing.

Form 1099-INT: Form 1099-INT is the IRS tax form used to report interest income. The form is issued by all payers of interest income to investors at year end and includes a breakdown of all types of interest income and related expenses. Payers must issue Form 1099-INTs for any party to whom they paid at least $10 of interest during the year.

Form 1099-K: A payment settlement entity (PSE) must file Form 1099-K for payments made in settlement of reportable payment transactions for each calendar year. A PSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.

Form 1099-MISC: The Form 1099-MISC is an Internal Revenue Service (IRS) tax return document used to report miscellaneous payments made to nonemployee individuals, such as independent contractors, during the calendar year. (www.shrm.org)

Form 1099-NEC: In the context of 1099 tax filing, NEC stands for “Nonemployee Compensation” (the first letters of the three words None, Employee and Compensation). Most tax payers recognize NEC as box 7 on Form 1099-MISC. NEC is used to report income paid to independent-contractors / the-self-employed (referred to as 1099 employees for simplification purposes). So, while employers report income that gets paid to employees on Box 1 (Wages, tips, other compensation) of the W2 form, payers report income that gets paid to none-employees on Box 7 (NEC) of the 1099-MISC form. As an individual, if you received form 1099-MISC instead of Form W-2 then the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

Form 1099-OID: Form 1099-OID is a tax form intended to be submitted to the Internal Revenue Service by the holder of debt instruments which were discounted at purchase to report the taxable difference between the instruments' actual value and the discounted purchase price.

Form 1099-R: Form 1099-R is a tax form from the Internal Revenue Service (IRS) for reporting distributions from annuities, profit-sharing plans, retirement plans, IRAs, insurance contracts, or pensions.

Form 1099-S: A Form 1099-S is a tax document used to ensure that the full amount received for a real estate sale of some kind is accurately reported. A 1099-S can also be used to report income made on a rental property or investment property. For selling real estate, the buyer must complete and file their own 1099-S.

Form 945: IRS Form 945 is titled Annual Return of Withheld Federal Income Tax. Form 945 is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Form 990 : Form 990 (officially, the "Return of Organization Exempt From Income Tax") is a United States Internal Revenue Service form that provides the public with financial information about a nonprofit organization. It is often the only source of such information.

Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)

Form W-8: Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity's status as non-resident alien or foreign national who works outside of the United States.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

Fringe Benefits: An extra benefit supplementing an employee's salary, for example, a company car, subsidized meals, health insurance, etc.

Golden Parachute Payments: Golden parachute payments are payments of compensation made to individuals whose companies experience a change in control

IRC Section 274: Section 274(k) generally provides that no deduction is allowed for the expense of any food or beverages unless (A) such expense is not lavish or extravagant under the circumstances, and (B) the taxpayer (or an employee of the taxpayer) is present at the furnishing of such food or beverages.

IRC Section 3406(a): Requires that, under certain circumstances, including the payee's failure to provide a TIN, the payer must perform backup withholding.

IRC Section 409A: Section 409A of the United States Internal Revenue Code regulates nonqualified deferred compensation paid by a "service recipient" to a "service provider" by generally imposing a 20% excise tax when a certain design or operational rules are contained in the section are violated.

IRC Section 6041(a): Provides that persons engaged in trade or business must report certain payments on an information return.

IRC Section 6045: Every person doing business as a broker shall, when required by the Secretary, make a return, in accordance with such regulations as the Secretary may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and such other information as the Secretary may by forms or regulations require with respect to such business.

IRC Section 6109(a)(2): Requires that a payee provide a TIN to the payer when the payment will be reportable on an information return.

IRC Section 6721: If an employer fails to file a correct Information, return by the due date, and cannot show reasonable cause, the employer may be subject to a penalty as provided under IRC Section 6721.

IRC Section 6722: IRC Sec. 6722 authorizes a civil penalty for failing to provide payees with correct copies of statements furnished to the IRS.

IRC Section 6724: I.R.C. § 6724(a) Reasonable Cause Waiver — No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.

IRC Section 70433: An "IRC Section 70433" refers to a provision within the U.S. tax code related to recent changes for reporting payments made on Forms 1099-MISC and 1099-NEC. The section is not part of the current official Internal Revenue Code but was enacted as part of a recent piece of legislation, the "One Big Beautiful Bill Act" (OBBBA). Specifically, Section 70433 does the following: Increases the reporting threshold, adds inflation adjustments, and affects backup withholding.

ITIN : An Individual Taxpayer Identification Number is a United States tax processing number issued by the Internal Revenue Service. It is a nine-digit number that begins with the number 9, and the 4th and 5th digits, also known as second section, range from 70 to 88, 90 to 92 and 94 to 99.

Independent Contractor: An independent contractor is a person or entity contracted to perform work or provide services to another entity as a non-employee. As a result, independent contractors must pay their own Social Security and Medicare taxes. - Investopedia (https://www.investopedia.com/)

Information Returns Intake System (IRIS): The Information Returns Intake System (IRIS) Taxpayer Portal is a system that provides a no cost online. method for taxpayers to electronically file Form 1099 series. The Taxpayer Portal allows you to enter. data to create Forms 1099 by either keying in the information or uploading a .csv file.

Intangible Personal Property: Intangible personal property is an item of individual value that cannot be touched or held. Intangible personal property can include any item of worth that is not physical in nature but instead represents something else of value. Examples of intangible personal property include patents, copyrights, life insurance contracts, securities investments, and partnership interests.

Intellectual Property (IP): Intellectual property (IP) refers to creations of the mind, such as inventions, literary and artistic works, designs, and symbols, which are protected by law through exclusive rights granted to the owner for a limited time. The main types of IP protection are patents for inventions, copyrights for creative works, trademarks for brand identifiers, and trade secrets for confidential business information. IP rights serve to provide financial incentives for innovation, drive economic growth, and allow creators to control and benefit from their works.

Limited Liability Company (LLC): An LLC is a corporate structure where members cannot be held accountable for the company’s debts or liabilities. This can shield business owners from losing their entire life savings if, for example, someone were to sue the company. Can be a single member (much like a sole proprietor) or a multi-member. It shares certain traits of both corporations as well as partnerships or sole proprietorships. It is not a corporation.

Nonqualified Deferred Compensation (NQDC): A nonqualified deferred compensation (NQDC) plan is an elective or non-elective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee or independent contractor compensation in the future. (www.irs.gov)

Personal Property: Personal property is something that you could pick up or move around. This includes such things as automobiles, trucks, money, stocks, bonds, furniture, clothing, bank accounts, money market funds, certificates of deposit, jewels, art, antiques, pensions, insurance, books, etc.

Real Property: Real property is land and any property attached directly to it, including any subset of land that has been improved through legal human actions. Examples of real properties can include buildings, ponds, canals, roads, and machinery, among other things

Reasonable Cause : Reasonable cause is based on all the facts and circumstances in your situation. The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your federal tax obligations but were nevertheless unable to do so.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

TIN Match Program: TIN Matching is part of a suite of Internet-based pre-filing e-services that allows “authorized payers” the opportunity to match 1099 payee information against IRS records prior to filing information returns.

Tariff: Tariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters.

Tax Cuts and Jobs Act: The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Pub.L. 115–97, is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act, that amended the Internal Revenue Code of 1986.

Tax Exempt Organization Search Tool: Tax Exempt Organization Search helps users find information about a tax-exempt organization’s federal tax status and filings.

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

Transaction: In QuickBooks, a transaction type identifies what kind of transaction occurred, such as a customer transaction, bill payment or a bank transfer. When you submit a transaction, you type in a transaction code to represent it.

Transmitter Control Code (TCC): The Transmitter Control Code (TCC) is an identifier that the IRS uses to distinguish different electronic filing companies. It's necessary when you need to file for a correction. Getting a TCC depends on how you file your 1099 forms

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

Wage: A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.