What Is Form 1099-NEC for Non-Employee Compensation? – NerdWallet

While you ’ re probable familiar with respective forms from the IRS already, there ’ s another tax form that should be on your radar : form 1099-NEC. Form 1099-NEC, non-employee compensation, was revived as of the 2020 tax year. now, alternatively of reporting compensation that you paid to non-employees ( like freelancers and autonomous contractors ) on Form 1099-MISC, that information gets reported on Form 1099-NEC .

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What is Form 1099-NEC?

The IRS has a farseeing list of informational returns that it requires businesses to file. Part of that list includes 1099 forms, which detail any income a person receives other than their wages, wage or tips ( which are reported on a W-2 ). Form 1099-NEC is used to report non-employee compensation that you paid during the year. So that freelancer that you hired for a few projects or that contractor that you have working in market are going to need to receive a 1099-NEC this class.

Who needs to file Form 1099-NEC?

You ’ ll need to file Form 1099-NEC if you paid person at least $ 600 during the year who meets these criteria :

  • They are not your employee .
  • You made payment for services in the course of your occupation — in other words, this wasn ’ t a personal payment .
  • They are an individual, partnership or estate. In a few cases, payments made to corporations will besides need to be included .

These payments that you made can include commissions, fees, prizes and awards for services. Basically, if in the by you filed form 1099-MISC for person you paid for their occupation services, you ’ ll be filing Form 1099-NEC alternatively this year. There are some exceptions to this. You won ’ thymine include any employee payments, like wages paid to employees or business travel allowances paid to employees. These payments may need to be reported on Form W-2. early exceptions include :

  • Payments to most corporations, both S-corporations and C-corporations. You would lone include payments to corporations if it was for pisces purchases for cash, lawyer ’ sulfur fees or payments made by a federal executive agency .
  • Payments for trade, telegrams, call, freight, storage and similar items .
  • rip payments made to real estate agents or place managers .
  • Payments to a tax-exempt security organization .

What’s included on Form 1099-NEC?

Form 1099-NEC is a reasonably curtly mannequin with multiple copies, alike to form 1099-MISC. The information included on Form 1099-NEC includes :

  • Payer ’ sulfur information, including name, address and taxpayer designation number ( TIN ) .
  • Recipient ’ second information, including name, address and TIN .
  • The sum total of non-employee recompense paid .
  • Any federal or submit income tax withhold .

The easiest way to get the personal information that you need from a non-employee is to have them fill out a W-9. With that and the data from your accounting records, you should have enough information to fill out the 1099-NEC. just like with the 1099-MISC, there are multiple copies of the form that need to be distributed. These copies are :

source : IRS

What is reported on Form 1099-MISC?

now that Form 1099-NEC is in use again, Form 1099-MISC won ’ triiodothyronine be used to report nonemployee recompense. It silent has a function in your coverage, though. You ’ ll habit Form 1090-MISC to report if you ’ ve paid anyone at least $ 10 in royalties, or $ 600 or more in :

  • Rents .
  • Prizes and awards .
  • early income payments .
  • broadly, the cash paid from a fanciful principal sign to an individual, partnership or estate of the realm .
  • Any fishing gravy boat proceeds .
  • Medical and health care payments .
  • Crop insurance proceeds .
  • Payments to an lawyer .
  • section 409A deferrals .
  • Nonqualified postpone compensation .

now that non-employee compensation international relations and security network ’ thymine included on the 1099-MISC anymore, the boxes have been re-arranged. Box seven, which used to include non-employee recompense, immediately is used for direct sales made of more than $ 5,000. Things on the form will look a little different, but it hasn ’ t changed well.

When is Form 1099-NEC due?

The due date for Form 1099-NEC is Jan. 31. You ’ ll need to send a transcript of the form to both the recipient role and the IRS by this date. Like with other tax forms, if the due date falls on a weekend or holiday, you must file the form on the adjacent business day. Form 1099-MISC has a slenderly unlike due date. You must provide a 1099-MISC to any recipients by Jan. 31, but you don ’ t need to file it with the IRS until Feb. 28, or March 31 if filing electronically. You can request copies of official 1099 forms from the IRS web site, and you ‘ll receive them by mail. If you file electronically, you can use the IRS Filing Information Returns Electronically ( FIRE ) system. Both the 1099-NEC and the 1099-MISC can be filed either electronically or by paper form .

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