3 Things to Know About Form 1099-NEC

What is Form 1099-NEC (Nonemployee Compensation)?

The IRS is bringing back a form last used in 1982s —Form 1099-NEC, to be used beginning with 2020 information returns. The draft 2020 version of the form has been posted by the IRS to the agency’s website. Part of the rationale for the new Form 1099–NEC was that the Protecting Americans from Tax Hikes (PATH) Act of 2015.

It will be used to report at least $600 payments made to each person during the calendar year for your business:

Services performed by someone that was not your employee
- Include parts/materials used to perform the service
Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish
Payments to attorneys

Withheld any federal income tax under the backup withholding rules regardless of the payment amount.

Common examples of who will receive Form 1099-NEC:

Attorneys
Architects
Accountants
Graphic Designers
Web Developer
IT Consultants
Freelance writer
Non-employee Sales Commission
Freelance Contractors
Landscapers
Other self-employed individuals

Form 1099-NEC:

Due to IRS & Recipient 2/1/21

A IRS
1 State Tax Department
B Recipient
2 Recipient copy to be filed with state income tax return (if applicable)
C Payer

Form 1099-MISC:

Due to recipient by 2/1/21 or 2/16/21 if reporting in box 8 or 10. Due to IRS by 3/1/21 (paper) or 3/31/21 (electronic)

A IRS
1 State Tax Department
B Recipient
2 Recipient copy to be filed with state income tax return (if applicable)
C Payer

Ready to start your new year with organized financials in preparation for tax season? Plumb Family CFO works in partnership with your CPA and personal financial team. Fill out the form below to find out more.

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