The IRS has, for years, used the 1099-MISC for all payments made to non-employees. When you file taxes in 2021, this will be different. The IRS form 1099-NEC will be the new way to report non-employee compensation for payments made in 2020. Keep reading to learn more about what counts for the IRS form 1099-NEC.
Business owners are required to use this form when their payments meet the following conditions:
*you are required to file IRS form 1099-NEC for anyone you withheld federal income tax for any amount, even if it is less than $600.
You must deliver the IRS form 1099-NEC to non-employees no later than January 31st the year after the reporting year. This means that you must deliver forms by February 1st, 2021 (Jan. 31 is a Sunday). We highly suggest e-filing. Download the form here.
With this new form, the 1099-MISC will no longer have box 7 for non-employee payments. This box is now for reporting direct sales of $5,000 or more. Other changes to the form include:
If you are unsure about whether you should file certain cases as a 1099-MISC or a 1099-NEC, consult this article by the IRS or contact us for more information! We’d be glad to make sure you file correctly and meet your deadlines.
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