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Information Returns: Small-Business Taxes (2025 IRS Guide)

This guide covers “Information Returns” within small-business taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 334 (2025), Tax Guide for Small Business, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Information Returns

If you make or receive payments in your business, you may have to report them to the IRS on information returns. The IRS compares the payments shown on the information returns with each person’s income tax return to see if the payments were included in income. You must furnish a copy of each information return you are required to file to the recipient or payee. In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns.

Form 1099-MISC.

Use Form 1099-MISC, Miscellaneous Information, to report certain payments you make in your business. These payments include the following items.

  • Rent payments of $600 or more, other than rents paid to real estate agents.

  • Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows.

  • Royalty payments of $10 or more.

  • Payments to certain crew members by owners or operators of fishing boats.

  • Amounts paid for the purchase of fish for resale from any person engaged in the business of catching fish.

You also use Form 1099-MISC to report your sales of $5,000 or more of consumer products to a person for resale anywhere other than in a permanent retail establishment.

Form 1099-NEC.

File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business to whom you have paid at least $600 during the year in:

  • Services performed by someone who is not your employee (including parts and materials) (box 1),

  • Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 1), or

  • Payments to an attorney (box 1).

You must also file Form 1099-NEC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

.If you use Form 1099-NEC to report sales totaling $5,000 or more of consumer products, then you are required to file Form 1099-NEC with the IRS by January 31..

Form W-2.

You must file Form W-2 to report payments to your employees, such as wages, tips, and other compensation, and withheld income, social security, and Medicare taxes. You can file Form W-2 online. For more information about Form W-2, see the General Instructions for Forms W-2 and W-3.

Penalties.

The law provides for the following penalties if you do not file Form(s) 1099-MISC, Form(s) 1099-NEC, or Form(s) W-2 or do not correctly report the information. For more information, see the General Instructions for Certain Information Returns.

  • Failure to file information returns. This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information.

  • Failure to furnish correct payee statements. This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information.

Other penalties.

Accuracy-related or fraud penalties may apply in the case of an underpayment of tax attributable to negligence, substantial understatement of income tax, reportable transaction understatements, or fraud. See sections 6662, 6662A, and 6663.

Waiver of penalties.

These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect.

In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. (A de minimis number of returns is the greater of 10 or one-half of 1% of the total number of returns you are required to file for the year.)

Form 8300.

File Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction or two or more related business transactions. Cash includes U.S. and foreign coin and currency. It also includes certain monetary instruments such as cashier’s and traveler’s checks and money orders. Cash does not include a check drawn on an individual’s personal account (personal check). For more information, see Pub. 1544, Reporting Cash Payments of Over $10,000.

Penalties.

There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements.

Table 1-3. Going Out of Business Checklists

  • (Note: The following checklists highlight the typical final forms and schedules you may need to file if you go out of business. For more information, see the instructions for the listed forms.)
IF you are liable for... THEN you may need to...
Income tax □ File Schedule C (Form 1040) with your Form 1040 or 1040-SR for the year in which you go out of business.
□ File Form 4797 with your Form 1040 or 1040-SR for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less.
□ File Form 8594 with your Form 1040 or 1040-SR if you sold your business.
SE tax □ File Schedule SE (Form 1040) with your Form 1040 or 1040-SR for the year in which you go out of business.
Employment taxes □ File Form 941 for the calendar quarter (or Form 944 for the year) in which you make final wage payments. Note: Do not forget to check the box and enter the date final wages were paid on line 17 of Form 941 or line 14 of Form 944.
□ File Form 940 for the calendar year in which final wages were paid. Note: Don’t forget to check box d, Final: Business closed or stopped paying wages under Type of Return.
Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments.
□ File Form W-3 to file Forms W-2.
□ Provide Form(s) 1099-MISC and Form(s) 1099-NEC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business.
□ File Form 1096 to file Form(s) 1099-MISC and Form(s) 1099-NEC.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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