Explanation:
Businesses use this form to report payments of $600 or more for services performed by non-employees. The form helps the IRS track income that might not be subject to withholding tax, ensuring proper tax compliance by both parties.
Practical Example of Form 1099-MISC:
A graphic design firm pays a freelance designer $2,000 for project work. The firm reports this payment to the IRS using Form 1099-MISC, and the freelancer includes this income in their tax return.
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