What Is Considered Miscellaneous Income?

Income that doesn’t fit common categories like wages or investment earnings is often called “miscellaneous income” under U.S. tax law. Accurate reporting of this income is important for individuals and businesses. While the term might suggest a broad catch-all, specific rules define what constitutes miscellaneous income for tax purposes.

Defining Miscellaneous Income

“Miscellaneous income” refers to earnings from sources not classified as salaries, interest, or dividends. Historically, this category was broader, including payments for services by independent contractors. A tax law change in 2020 redefined this. Nonemployee compensation, for services by individuals not considered employees, is now reported on Form 1099-NEC.

This change means Form 1099-MISC and “miscellaneous income” primarily cover payments not related to independent contractor services. The category serves as a residual for income streams requiring reporting that don’t fit other dedicated forms. Thus, “miscellaneous income” is now a more narrowly defined term focusing on distinct income types.

Common Forms of Miscellaneous Income

Various payments are classified as miscellaneous income and reported on Form 1099-MISC. These include rents, which are payments of $600 or more for the use of real estate, personal property, or equipment in a trade or business. For example, rental income from office space or farmland falls into this category.

Royalties, payments of $10 or more for the use of intellectual property like copyrights, patents, or natural resources, are also considered miscellaneous income. This includes earnings from a published book or a mineral lease. Prizes and awards, such as winnings from sweepstakes, contests, or monetary awards of $600 or more, are another common example. This applies to non-cash awards, where the fair market value is reported.

Other specific payments reported as miscellaneous income include:
Medical and health care payments of $600 or more made to providers.
Crop insurance proceeds of $600 or more.
Fishing boat proceeds.
Gross proceeds paid to an attorney in connection with legal services, typically $600 or more.
Substitute payments in lieu of dividends or interest, which are payments of $10 or more.

Reporting Requirements for Miscellaneous Income

Form 1099-MISC is the primary document payers use to report miscellaneous income to the IRS and recipients. Businesses generally issue this form for payments of $600 or more during the calendar year. However, for royalties and substitute payments in lieu of dividends or interest, the threshold is $10 or more.

Payers must furnish Copy B of Form 1099-MISC to recipients by January 31 of the year following payment. For example, 2024 payments require the form by January 31, 2025. Payers must file Copy A of Form 1099-MISC with the IRS by February 28 for paper filing, or by March 31 for electronic filing.

Recipients should use the Form 1099-MISC information to report income on their federal tax return, typically Schedule 1 (Form 1040). Even if a Form 1099-MISC is not received because income was below the reporting threshold, the income is still taxable and must be reported.

Income Not Classified as Miscellaneous

Many other common types of income are reported differently and are not considered miscellaneous income. Wages and salaries, for instance, are reported by employers on Form W-2. Nonemployee compensation, previously reported on Form 1099-MISC, is now reported on Form 1099-NEC for payments of $600 or more to independent contractors and freelancers.

Interest income from sources like bank accounts or bonds is reported on Form 1099-INT. Dividend income from stock ownership is reported on Form 1099-DIV. Capital gains or losses from the sale of investments, such as stocks or real estate, are reported on Form 1099-B and detailed on Schedule D (Form 1040).

Distributions from retirement plans, including pensions and annuities, are reported on Form 1099-R. Unemployment compensation received from a state government is reported on Form 1099-G. These distinct reporting mechanisms ensure each income type is categorized and taxed according to specific IRS guidelines, preventing confusion with miscellaneous income.