Quick Answer
You will not receive a 1099-MISC form if you earned less than $600 in non-employee compensation from a single payer in 2022. The IRS requires payers to issue a 1099-MISC to service providers who received $600 or more over the course of the year for services performed as an independent contractor. If you earned less than the $600 threshold from an individual payer, that income does not need to be reported on a 1099-MISC and you will not receive one. However, you still must report all taxable income even if you do not get a 1099, including income earned from side jobs, freelancing, and miscellaneous non-employee compensation under $600.
What Is a 1099-MISC?
A Form 1099-MISC is an information return that is used to report various types of income other than wages, salaries, and tips. 1099-MISC forms are issued by payers who pay non-employee compensation of $600 or more over the calendar year for services performed by independent contractors, freelancers, and other self-employed individuals.
Some examples of income reported on a 1099-MISC include:
- Fees earned by consultants, freelancers, and independent contractors
- Commissions earned by salespeople
- Royalties earned by artists, authors, and inventors
- Honoraria received for services
- Prizes and awards that are not for services, such as winnings from raffles or game shows
- Rent payments for real estate or equipment rentals
- Medical/healthcare payments
- Attorney fees
- Crop insurance proceeds
- Fishing boat proceeds
The payer issues Copy B of the 1099-MISC form to the payee by January 31st to report non-employee compensation for the prior tax year. The payer also sends Copy A to the IRS to report what was paid. As the payee, you use the information on the 1099-MISC you receive to complete your tax return and report the income on the proper lines and forms.
When Will I Get a 1099-MISC?
You will receive a 1099-MISC from a payer if you meet the following criteria:
- You performed services for the payer as an independent contractor, freelancer, or self-employed individual, not as an employee.
- You received $600 or more in total non-employee compensation from that payer over the course of the calendar year.
The $600 reporting threshold applies to the total payments received from the individual payer, not to each payment separately. So even if you never got more than $500 in a single payment, if your total compensation from that source was $600 or more for the year, they must issue you a 1099-MISC.
Some common scenarios when you will get a 1099-MISC include:
- A company paid you $650 for freelance services
- You earned $5,000 in commission as a sales rep
- You received $1,200 in royalties from your book publisher
- A law firm paid you $5,000 as an independent contractor attorney
In each case, the payments met or exceeded the $600 reporting threshold so the payer has to furnish you with a 1099-MISC. However, if you only received one $500 payment from a client, you would not get a 1099-MISC since it was under $600.
Do I Have to Report Income Under $600?
Even if you do not receive a Form 1099-MISC because your compensation was under $600, you are still required to report the income on your tax return if it is taxable. The IRS requires all taxable income to be reported whether you got a 1099 or not.
Some examples of taxable income under $600 that would still need to be reported include:
- Earning $500 as an independent contractor
- $400 in freelance photography services
- $150 in commission payments
- $100 in royalties
You must legally report this income on Schedule C or Schedule C-EZ (Sole Proprietorship) when you file your tax return, even without receiving a 1099-MISC. The payer is not required to send you a 1099 since the amount is under $600, but you still have to disclose it to the IRS.
How Do I Report Income Without a 1099?
If you earned taxable non-employee compensation under $600 and did not receive a 1099-MISC, you still report it as part of your self-employment income. Here are the steps:
- On Schedule C or Schedule C-EZ, report your total income from the activity for the tax year.
- On Schedule SE, use the total profit/loss from Schedule C to calculate your self-employment tax.
- Report the income as Other Income on Form 1040 and pay any additional income tax due.
Be sure to keep accurate records like invoices and bank statements to document the income sources and amounts in case the IRS ever requests verification. Failing to report all taxable income could lead to penalties, interest, and additional taxes owed.
What If I’m Not Self-Employed?
The 1099-MISC reporting requirements apply specifically to income earned as a non-employee, such as an independent contractor or self-employed individual. If you received payments as a regular W-2 employee, they do not apply.
For example, if you:
- Earned a $100 cash tip at your job as a restaurant server
- Received a $200 holiday bonus at your office job
- Picked up a $500 one-time gig through your employer
None of these scenarios would generate a 1099-MISC because you received the income as an employee, not as a freelancer or contractor. The W-2 your employer sends you will report your total pay for the year regardless of amount.
If you are uncertain whether you qualify as an employee or independent contractor, consult IRS Publication 15-A which provides guidance on determining worker classification. Getting this right ensures you comply with the proper tax rules.
Example: When a 1099-MISC Is Required
Here is an example to illustrate when you would and would not receive a 1099-MISC:
Scenario
Mike is an independent consultant who worked for two clients this year:
- Client A paid Mike $550 in total for the year
- Client B paid Mike $750 in total for the year
Analysis
- Client A does not have to issue Mike a 1099-MISC because the total paid was under $600.
- Client B does have to issue Mike a 1099-MISC because their total payments exceeded the $600 reporting threshold.
Outcome
- Mike does not receive a 1099-MISC from Client A
- Mike does receive a 1099-MISC from Client B
- Mike must report the full $550 from Client A and $750 from Client B on his Schedule C, even without receiving a 1099 from Client A.
This example illustrates when the 1099-MISC is required and when income still needs to be reported even without receiving one.
Key Takeaways
- You will not get a 1099-MISC if you received less than $600 in non-employee compensation from a payer.
- The $600 threshold applies to the total amount paid for the year, not per payment.
- Even without a 1099, you must report all taxable income like freelance services, commissions, etc. on your tax return.
- Non-employees like independent contractors who get 1099s report this income as self-employment income.
- Employees who receive W-2s do not get 1099-MISCs for bonus or gig income.
- Keep records to support your income reporting in case the IRS inquires.
The Bottom Line
You are off the hook from receiving a 1099-MISC form if your non-employee compensation was less than $600 for the year. But that does not exempt you from reporting the income on your tax return. All taxable income must be disclosed whether you receive a 1099 or not. Independent contractors and freelancers report earnings as self-employment income on Schedule C. The only exception is if you earned the income as a regular employee and not an independent contractor, in which case it would be subject to W-2 reporting instead.