Ask the Experts, Volume 2

Question: If Company A issues a check to a payee, then later, Company A has to reissue that same check due to the payee losing the check, does Company A need to do an amended 1099-NEC if it crosses tax years?

Answer: No. The question is asking about an organization issuing a check in, say, November 2026. And the recipient never cashes the check for whatever reason, so the organization reissues the check sometime in 2027. If this is a reportable transaction, then the proper reporting would have been in 2026. The re-issuance of a check in 2027 for that same transaction does not trigger any reporting requirements. Per regulation 1.6041-1, payment is considered made (and is thus reportable) when:

(I)t is credited or set apart to a person without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made, and is made available to him so that it may be drawn at any time, and its receipt brought within his own control and disposition.

You wrote the check in 2026 and sent it off. Your payee, at that point, had control and disposition over the funds, making it reportable then. 

Question: We have an invoice from a C-Corp collection agency for past medical expenses. Would this vendor still be reportable on a 1099-MISC, Box 6?

Answer: At first glance, the answer would seem to be no, because this seems like a billing function and not a medical “service.” However, regulation 1.6041-3(p)(1) tells us that medical services include payments to businesses “engaged in the billing and collecting of payments in respect to the providing of medical and health care services.”

So the answer here is yes, this is reportable. Reminder: the corporate exception to reporting doesn’t apply to medical services. 

Question: A resident physician provided ACLS instructor course services over $2,000 and now is planning to give a lecture without payment. If a book purchase of up to $200 is offered to the physician, should this be included in 1099-NEC box 1 reporting?

Answer: if this person is an independent contractor, then yes. “Compensation” means both cash and non-cash compensation. If you gave a $200 book to the instructor, and their total other cash compensation was $2,000, you’d report $2,200 on the 1099. (NOTE: there would be a debate here over whether this is 1099-NEC, or box 6 of 1099-MISC….)

If this physician is an employee, then this would all run through their W-2 unless the training they provided was truly something outside their job. 

Editor’s note ACLS stands for Advanced Cardiovascular Life Support.

Question: A judgment was entered in favor of the Plaintiff against the Defendant in the amount of $2,000. The judgment went unpaid for a considerable amount of time. Subsequently, the parties entered into a settlement agreement, the Defendant agreeing to pay the Plaintiff the amount of the original judgment ($2,000) plus accrued interest ($500). The interest was calculated based on the statutory rate in the applicable state. There are no circumstances that qualify this settlement to be treated as exempt from tax reporting. Should the full $2,500 be reported on Form 1099-MISC in Box 3, or should $2,000 be reported on Form 1099-MISC in Box 3 and $500 be reported on Form 1099-INT in Box 1?

Answer: When we talk about lawsuit settlements, we usually just say it goes in box 3 of 1099-MISC. But that’s not always true. If reportable, it can go on various types of information forms (all types of 1099s, and sometimes even on a W-2).

In this situation, you’d have the settlement itself, of $2,000, reported in box 3 of 1099-MISC. The interest portion of $500 “could” be reportable, but in this situation is not reportable, because the amount of interest paid is below the reporting threshold.

There are two thresholds with interest:

• $10 for interest paid on accounts on deposit (think: savings account interest paid by the bank).
• $2,000 (the usual threshold for so many things) for interest paid in the course of a trade or business. 

Both types of interest go on a 1099-INT, but this interest is not bank account interest, so the $10 threshold doesn’t apply. Instead, you use $2,000. The payment of $500 is below that threshold – no reporting required.

If you transferred the money to the other party’s attorney, the reporting would be:

• Issue a 1099-MISC to the attorney, showing $2,500 in box 10 (gross proceeds paid to an attorney).
• Issue another 1099-MISC to the plaintiff, showing $2,000 in box 3.
• No reporting required on the interest portion.

Let’s increase the dollar amounts and say it was a $10,000 settlement plus another $2,000 of interest, making the total payment $12,000:

• Issue a 1099-MISC to the attorney, showing $12,000 in box 10 (gross proceeds paid to an attorney).
• Issue another 1099-MISC to the plaintiff, showing $10,000 in box 3.
• Issue a 1099-INT to the plaintiff, showing $2,000 of interest paid.