IRS tax Form 1099 reports certain payments made to people or businesses that are not considered employees. The University typically uses Form 1099-MISC (other reportable income) or Form 1099-NEC (payments for services) to report payments made to vendors and individuals, such as contractors or attorneys.

Usual Reporting Categories

The University tends to use a subset of the boxes available on Forms 1099-MISC and 1099-NEC. Other boxes on Forms 1099-MISC and 1099-NEC are not used by the University except in rare cases.

When a payment is reportable, make sure to select the correct withholding code and enter it on the “Withholding Detail” panel of the Non-PO Voucher in PeopleSoft. Correct coding ensures accurate year-end reporting.

1099-MISC (Miscellaneous Information)

  • Box 1 – Rents: Real estate, equipment, office space, or land rentals.
  • Box 2 – Royalties: Royalties paid to employees, non-employees, or retirees.
  • Box 3 – Other Income: Includes:
    • Prizes or awards not related to services
    • Payments to research subjects
    • Deceased employee wages paid to an estate
  • Box 6 – Medical and Health Care Payments: Payments to medical providers, including corporations.
  • Box 10 – Gross Proceeds Paid to an Attorney: Settlements or legal payments made on behalf of others.

Form 1099-NEC (Nonemployee Compensation)

  • Box 1 – Nonemployee Compensation: Use for payments for services performed by non-employees, including:
    • Independent contractors
    • Consultants
    • Accountants, architects, and attorneys
    • Fees, commissions, and service-related prizes or awards
  • Box 4 – Federal Income Tax Withheld: Used rarely, only if backup withholding applies.

Treatment by Entity or Payment Type

An assistantship is payment to a student for their teaching or research work. These payments are reported as wages on Form W-2 and not reported via Form 1099. 

Payments to attorneys or law firms must always be reviewed carefully. Form 1099 reporting rules apply even if an attorney or firm is classified as a corporation: 

  • Settlements or payments for someone other than the University (Form 1099-MISC, Box 10) 
  • Legal services for the University (Form 1099-NEC, Box 1) 

Corporations usually do not receive a Form 1099, however, it is required for the following payments: 

  • Medical or health care services (Form 1099-MISC, Box 6) 
  • Gross proceeds paid to attorney (Form 1099-MISC, Box 10) 
  • Payment to attorney (Form 1099-NEC, Box 1) 

Honorariums are payments for a lecture, performance or other special service and should be reported on Form 1099-MISC. 

A Limited Liability Company (LLC) is a business owned by one or more people, called members, and usually receive a Form 1099. However, if the University receives a Form W-9 showing the LLC is taxed as a corporation, the LLC is usually exempt from Form 1099 reporting. 

Most LLCs are taxed like partnerships. The LLC does not pay federal income tax itself, but profits and losses are reported by members on their personal tax returns.  

Reporting for prizes, awards and other gifts varies depending on the circumstances and amount of the payment. See University Policy 22307 Awards, Prizes and Gifts for definitions and other details to determine whether a Form 1099 is necessary.  

Stipends are fixed payments to help cover expenses such as tuition or housing. This payment is not reported via Form 1099 and it is up to the individual receiving to decide if the stipend is taxable.  

A fellowship is a type of stipend based on academic achievement and follows the same rules as other stipends.  

For Additional Support

University Shared Services
University Shared Services
Phone

325 Jesse Hall
Columbia, MO 65211
United States

Central Payroll
Office of Finance
Phone

118 University Hall
Columbia, MO 65211
United States