The IRS released a new Form 1099-NEC: instructions for reporting nonemployee compensation.
One thing you may not have asked for for Christmas? A new IRS form. The IRS just released a new Form 1099-NEC for reporting nonemployee compensation. Here’s what you need to know about the new filing requirements for your business and how you can file Form 1099-NEC.
What is Form 1099-NEC
If you’ve reported nonemployee compensation before then you probably remember that employers used to use Form 1099-MISC. With Form 1099-NEC, the IRS is changing the requirements and releasing a new form for reporting those payments to nonemployees and independent contractors. You will no longer be able to report nonemployee compensation on Form 1099-MISC. Employers need to file Form 1099-NEC and provide any independent contractors or nonemployees with a copy by February 01, 2021.
Who Needs to File Form 1099-NEC
If you paid a nonemployee or an independent contractor more than $600, file Form 1099-NEC to report those payments to the IRS.
How to File Form 1099-NEC
Here are your step-by-step Form 1099-NEC instruction for 2020:
Box 1: Nonemployee compensation
In Box 1 of Form 1099-NEC, enter the total amount you paid for nonemployee compensation. This amount should be more than $600.
Box 2 and 3:
Provide your and your payee’s Taxpayer Identification Number (TIN) in these boxes.
Box 4: Federal Income Tax Withheld
Box 4 is for reporting backup withholding. Record any amount you withheld from your payment for federal income taxes. If your payee did not furnish their TIN, they will be subject to withholdings on their payment.
Box 5-7: State Information
You can use boxes 5-7 to provide state information, but you don’t have to fill them out for the IRS. This section is just for your convenience and can be used to furnish withheld state income tax, the abbreviation for your state, and your state identification number. In box 7, you can enter the amount for your state payment. Your state may require you to send them a paper copy of your form.
E-File Form 1099-NEC Easily With ExpressEfile
Filling out Form 1099-NEC is easy when you e-file. ExpressEfile checks your form for last-minute mistakes and errors that could lead to penalties and IRS rejections. You can correct mistakes easily and transmit Form 1099-NEC to the IRS instantly. If you run into any issues filing Form 1099-NEC for the first time, our support team is live, U.S.-based, and always happy to help.
Get your IRS requirements out of the way early this holiday season. We’re here to help you meet your deadline and e-file the new IRS Form 1099-NEC for 2020 tax year.