Updated October 16, 2026. Quick answer: Box 3 of Form 1099-NEC shows the total of excess golden parachute payments made to you, which the form says are subject to a 20% excise tax. The December 2026 recipient text is word for word the same as the 2025 text and sends you to your tax return instructions for where to report the amount. The box number did not change between the two editions.
Schedule 2 (Form 1040) for 2025, read line by line: Schedule 2 lines 17g to 17k.
Related reading on this site: Form 1099-NEC filing deadline.
What box 3 reports
The December 2026 recipient copy reads: “Shows your total compensation of excess golden parachute payments subject to a 20% excise tax.” “See your tax return instructions for where to report.” The 2025 recipient copy carries the identical sentences: “Shows your total compensation of excess golden parachute payments subject to a 20% excise tax.” The form label is “Excess golden parachute payments”.
The form gives no line on a schedule. That is why the sentence points you to the instructions for your own return, and why a tax preparer is the sensible next step for a box 3 amount. The rest of the form is laid out on the 1099-NEC and 1099-MISC boxes overview. Next to it, box 4 is where a payer shows withholding: “Shows backup withholding.” “Include this amount on your income tax return as tax withheld.”.
Why the payment is on a 1099-NEC
The payer instructions explain where these payments are reported. “Excess golden parachute payments are no longer reported on Form 1099-MISC.” “You can now report these payments on Form 1099-NEC, box 3.” The April 2025 instructions carry the same note: “Excess golden parachute payments are no longer reported on Form 1099-MISC.” The miscellaneous income form is covered on the Form 1099-MISC overview, and the payer side of 1099 paperwork is on the 1099 basics page.
How the payer figures the excess
The payer instructions define the amount: “Enter any excess golden parachute payments.” “An excess parachute payment is the amount over the base amount (the average annual compensation for services includible in the individual’s gross income over the most recent 5 tax years).” The payer is pointed to “See Q/A-38 through Q/A-44 of Regulations section 1.280G-1 for how to compute the excess amount.” You do not compute the box yourself, but the definition tells you what the number is.
The instructions also point payers to further guidance on valuing stock-based pay: “Rev. Proc. 2003-68”, “concerning the valuation of stock options for purposes of golden parachute payment rules.” If part of your payment was stock or options, the payer needs that valuation to reach the number in the box, so ask for the calculation if the amount looks wrong.
What a parachute payment is
Not every large payment qualifies. “A parachute payment is any payment that meets all of the following conditions.”
| Condition | As the payer instructions print it |
|---|---|
| 1 | “The payment is in the nature of compensation.” |
| 2 | “The payment is to, or for the benefit of, a disqualified individual.” |
| 3 | “The payment is contingent on a change in the ownership of a corporation, the effective control of a corporation, or the ownership of a substantial portion of the assets of a corporation” |
| 4 | “The payment has (together with other payments described in (1), (2), and (3), above, made to the same individual) an aggregate present value of at least three times the individual’s base amount.” |
The instructions also say who counts as a disqualified individual: “A disqualified individual is one who at any time during the 12-month period prior to and ending on the date of the change in ownership or control of the corporation” “was an employee or independent contractor and was, in regard to that corporation, a shareholder, an officer, or a highly compensated individual.”
How box 3 relates to box 1a
A person who receives a payment like this as an independent contractor is also covered by the box 1a instruction. “Enter in box 1a the total compensation, including any golden parachute payment.” The recipient description of box 3 is a separate statement: “Shows your total compensation of excess golden parachute payments”. Because the form text does not say how the two boxes add up, compare the amounts with the contract and the payer before filing. Box 1a is covered on its own page linked from the 1099-NEC and 1099-MISC boxes overview, and the box 1a income is normally reported on Schedule C if you are a sole proprietor.
The same instructions send the payments of an employee somewhere else: “For employee reporting of these payments, see Pub. 15-A.”
Edition and box numbers
The primary read for this page is the December 2026 revision of Form 1099-NEC (recipient copy) and the December 2026 Instructions for Forms 1099-MISC and 1099-NEC, which are the revisions for tax year 2026. Box 3 has the same number and the same recipient wording on the 2025 Form 1099-NEC and on the December 2026 form: the 2025 recipient copy reads “Shows your total compensation of excess golden parachute payments subject to a 20% excise tax.” What the December 2026 form added is boxes 1b, 1c and 1d, which sit above box 3 and do not renumber it. Both the December 2026 and the 2025 revisions were being served by irs.gov on 2026-10-16. Check the revision printed on the form you received, because the box numbers differ between the 2025 form and the December 2026 form.
Common mistakes
- Looking for box 3 on a Form 1099-MISC. The payer instructions say “Excess golden parachute payments are no longer reported on Form 1099-MISC.”.
- Treating any large payment as an excess golden parachute payment. The instructions require that “The payment is contingent on a change in the ownership of a corporation” and meet the other conditions in the table above.
- Expecting the form to name a return line. The recipient text only says “See your tax return instructions for where to report.”.
Related: Schedule C (Form 1040), self-employment tax explained, 1099 basics when you hire help, and first-year estimated taxes for the self-employed.
Sources
- Form 1099-NEC, Nonemployee Compensation (Rev. December 2026), recipient copy: https://www.irs.gov/pub/irs-pdf/f1099nec.pdf
- Form 1099-NEC, Nonemployee Compensation (2025), recipient copy: IRS archived PDF (irs.gov)
- Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026): https://www.irs.gov/pub/irs-pdf/i1099mec.pdf
- Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025): IRS archived PDF (irs.gov)
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.