Tax Compliance Guidelines
Form 1099-MISC Reporting - BC*

Activity: Form 1099-MISC Reporting - BC
Financial Policy: FIN-PAY-IV-220, Determination of Employee or Independent Contractor Status
Related Policies: IRC §3406(b)(3)
Additional Forms: Substitute Form W-9
Things to Know:
  • The University determines what is reportable on a 1099-MISC for tax purposes by the object code applied to each payment. The following list of frequently used object codes highlights some common object codes that will cause a payment to be reported on a 1099-MISC.
  • Indiana University uses the services of individuals, including students, who are not treated as employees of the institution and also make other types of non-payroll payments, such as royalties, that must be reported on Form 1099-MISC to US taxpayers as "other reportable payments." "Other reportable payments" are:
    • rents and commissions;
    • non-employee compensation for services;
    • royalties;
    • payments to research participants,
    • reportable gross proceeds paid to attorneys; and
    • other fixed or determinable gains, profits, or income payments.
  • The university will issue IRS Form 1099-MISC, which reports the amount of compensation paid to an independent contractor on an annual basis, if payments to that contractor equal or exceed $600.00 in the calendar year (or if payments equal or exceed $10.00 in the calendar year if the payments are for royalties).
  • Part of Indiana University’s tax responsibility is obtaining a valid Taxpayer Identification Number (TIN) from the individual to whom the employer makes a "reportable payment." The TIN is the Social Security number for individuals or an Employer Identification number for U.S. entities. If the individual does not provide a valid TIN or the IRS notifies the University that the payee's TIN is missing or incorrect, the University must withhold at a designated rate from the individual's payment (backup withholding). IRC §3406. It also is required to solicit the payee for the correct information. University policy is to solicit the payee for a valid TIN using Form W-9.
  • Reportable payments to non-US persons or corporations are reportable on Form 1042-S and have a different set of rules.

Please contact FMS Tax Department, for more information.
*BC - Budget Construction