ANNUAL INFORMATION RETURNS (FORM 1099) - REPORTING - 8422.191

(Revised: 02/2025)

 

Reporting Payments on Form 1099

At the end of each calendar year, reportable payments must be identified on Form 1099 to comply with the annual information reporting and income tax withholding requirements of the Internal Revenue Service (IRS) and the Franchise Tax Board (FTB).

Agencies/Departments must report the following payments:

• Compensation for services to medical corporations, legal service corporations, and non-corporate entities (except governmental units).
• Rents, royalties, prizes, awards, gross proceeds connected with legal services, fees, commissions, services not reported on Form W–2, and interest.

Form 1099-MISC – Miscellaneous Information

Payments must be reported on Form 1099-MISC (Miscellaneous Information) if all of the following conditions are met:

• Payment is within the course of your trade or business.
• Payment is at least $600 for rents, prizes, awards, and other income payments.
• Payment royalties of at least $10 or more or broker payments in lieu of dividends or tax-exempt interest are reportable.
• The payee is not a corporation.
  • Exception: All payments to medical corporations for services provided and attorneys or legal services corporations, including gross proceeds, are reportable.

The corresponding box numbers on the form are provided below:

 

Box No.	Form 1099-MISC
1	Rent of real or personal property
2	Royalties (e.g., oil, gas, copyrights)
3	Other income (including prizes, awards, and punitive damages not involving physical injury or sickness)
4	Federal income tax withheld (backup withholding)
6	Medical and health care payments (including doctors, medical corporations, dentists, audiologists, optometrists, psychologists, psychiatrists, etc.)
10	Gross proceeds paid to an attorney for legal services, pursuant to Internal Revenue Code Section 6045(f), that consists of amounts intended to be paid to the client and amounts intended for the attorney
16	State tax withheld

Form 1099-NEC - Nonemployee Compensation

Payments must be reported on Form 1099-NEC (Nonemployee Compensation) if all of the following conditions are met:

• Payment to someone who is not your employee.
• Payment for services in the course of your trade or business.
• The payee is an individual, partnership, estate, or, in some cases, a corporation.
• Payments to the payee of least $600 or more during the year.

The corresponding box numbers on the form are provided below:

Box No.	Form 1099-NEC
1	Nonemployee Compensation Includes fees, commissions, and services rendered as a nonemployee such as: Independent contractors Professional and consultant fees Commissions to real estate brokers Payments to entertainers Construction service contracts (e.g., roads, streets, buildings) Bonuses not reported on a Form W-2
4	Federal income tax withheld
5	State tax withheld

Payments not reported on Forms 1099-MISC and 1099-NEC include:

• Payments to governmental entities.
• Payments to most corporations for goods and services.
  • Exception: Payments to medical corporations and attorney or legal services corporations are reported.
• Payments for merchandise (including freight, storage, and similar charges) and utilities (e.g., electricity, gas, oil, water, telephone, and similar services).
• Payments of non-punitive damages (for physical injury or sickness) awarded by the courts.
  • Exception: Interest payments are reported.
• Salaries and wages paid from the State Payroll Revolving Fund or otherwise reported on Form W–2.
• Scholarships, fellowships, and stipends.
  • Exception: Whereas such payments are subject to the performance of services.
• Per diem and travel expense reimbursements are generally not considered reportable income.

Form 1099-INT – Interest Income

Payments must be reported on Form 1099-INT (Interest Income) if all of the following conditions are met:

• Interest income includes amounts of at least $10.
• Payment is within the course of your trade or business.

The corresponding box numbers on the form are provided below:

Box No.	Form 1099-INT
1	Interest income
4	Federal income tax withheld
8	Tax-exempt interest
17	State tax withheld

Payments not reported on Form 1099-INT include:

• Corporations
• Tax-exempt organization
• Individual retirement plan
• United States Government, a State, a State’s political subdivision and any wholly-owned agency or instrumentality
• Foreign government and political subdivision of a foreign government
• Registered dealers in securities and commodities
• Financial institutions
• Custodians and nominees
• Brokers

Payments that include Reportable and Non-Reportable Items

The following conditions apply to Forms 1099-MISC, 1099-NEC, and 1099-INT:

• When a payment to an individual includes both reportable and non-reportable items, agencies/departments have the option of reporting the total payment or only the reportable portion.
• If the agreement is only for a lump sum, the full amount will be reported (including gross proceeds paid to an attorney in connection with legal services).
• When a payment includes both interest and non-reportable principal, only the interest will be reported.
• When a payment to an external consultant includes a stated amount for travel expenses, per diem, or other expenses, as well as an amount for services, the total amount will be reported.

Agencies/Departments who file Form 1099 through the State Reportable Payment Program (SRPP) should direct any issues or questions to the State Controller’s Office, Supplier Management and Reporting Team (SMaRT) at FISCALSMaRT1099Help@sco.ca.gov.

Form 1099 Reporting for Agencies/Departments Deferred/Exempt from Using FI$Cal

Agencies/Departments deferred/exempt from using FI$Cal that do not utilize SRPP and the SMaRT as their reporting agent must directly file the Form 1099 in accordance with the IRS and the FTB reporting guidelines and furnish a copy to the payee. For annual reporting guidelines and regulatory changes related to electronic and paper filing rules, submission dates, and forms, refer to the IRS website and the FTB website. Agencies/Departments must ensure that reportable data is complete, accurate, and submitted on time.

For information and assistance, refer to the IRS homepage or contact the IRS Technical Services Operation at (866) 455-7438. For the FTB, refer to the FTB homepage or by emailing the FTB Information Returns Unit at IRPHelp@ftb.ca.gov.