The IRS has issued a new Form 1099-NEC to report non-employee compensation. Learn more about the new
for the year 2020.
Some states are requiring filers to file with the states directly. Learn more about the new
State filing Requirements
What is Form 1099-NEC?
The IRS has released the 2020 Form 1099-NEC to report non-employee payments. This move affects almost all businesses within the U.S. who need to report non-employee compensation. Up until now, Form 1099-MISC (box 7) was used to report non-employee compensation. But starting in the 2020 tax year (to be filed in 2021), businesses will need to use form 1099-NEC to report non-employee compensation.
Form 1099 NEC is an IRS tax form that is used to report payments made to contractors by business entities. Payments reported on 1099-NEC forms can include non-employee compensation to someone who is not our employee. A 1099-NEC form for a contractor is the same as a
W-2 form for an employee
. The form reports the total amount paid by the business to an individual during the course of a business or trade. Personal payments are not reported.
Businesses must file this form for each person to whom they have paid during the year. A business must provide a statement to the recipient to whom the payment is made. A business must also file this form with the IRS either electronically or on paper.
Generally, payments made to corporations are not reported on this form, but there are some exceptions to this rule. Payments made to an attorney must be reported on this form, irrespective of their corporation status. Employees' business expense reimbursements are not reported on this form. Generally, payments made to employees are reported on Form W-2. Generally, payments made to general contractors are reported in box 1.
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Who needs to file Form 1099-NEC?
All businesses that are operating for the purpose of making a gain or profit need to file this form if they meet any of the conditions below. Nonprofit organizations, trusts, cooperatives, federal, state, or local government agencies are also required to report payments.
When is this form filed?
A business is required to file if it:
Paid at least $600 for services for a trade or business by people not treated as its employee
Paid at least $600 to an attorney
Withheld any federal income tax under the backup withholding rules
What is the deadline to file Form 1099-NEC?
The deadline to file this form with the IRS is the end of January if filing on paper or electronically. However, the deadline to provide a recipient copy is at the end of January.
Important Note for the 2020 year 1099-NEC form:
The due date to e-file 1099-NEC is February 1, 2021. The due date to furnish the payee statement is also February 1.
for more information on the deadline.
What is the penalty for failure to file Form 1099-NEC?
The IRS imposes heavy penalties if a business fails to file or fails to file the correct information. There is a penalty for not providing recipient copies. The penalty increases with time. So, even if you have not filed your form in time, we encourage you to file as soon as possible.
for more information on penalties.
About Form 1099-MISC
About Form W-2
About Form 1099-INT
About Form 1099-DIV
About Form 1099-B
About Form 1099-C
About Form 1099-R
About Form 1099-S
About Form 1098
About Form 1098-T
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