We purchased software licenses; is this reportable on a 1099M?


It if was custom software that was developed for you, then the IRS considers this payment for services and it is reportable.

If you are paying royalties for use of the software, that would also be reportable if the amount is over $10; report in box 2.

If the software license is for "off-the-shelf" software, then it is not reportable--that software is considered merchandise.

However, if the software provider were to provide services for you along with the software, then payments would be reportable.

We confirmed this with the IRS, speaking with Ms. King, ID#1002173. See IRS Instructions for Form 1099-MISC. You can reach the IRS information reporting customer service center by calling 866-455-7438.

Have more questions? Submit a request