1099 Form Changes for 2020

Form 1099It’s Alive! The 1099-NEC form has been brought back to life. Just in time for Halloween!

“The new Form 1099-NEC—which is actually an old form that hasn’t been in use since 1982—is used to report any compensation given to nonemployees by a company. 1 The IRS has separated the reporting of payments to nonemployees from Form 1099-MISC and redesigned it for tax year 2020.”

Link HERE

So you are probably asking yourself which payments should be reported on which form.

Here is a summary:

The 1099-MISC for should now be used for the following:

Rent

Yes, that’s it for most companies.

Below is the longer list for those that need it.  Note that Box 10 is only for settlement payments i.e. there is a claim against your business and you pay the claimant’s lawyer the settlement.

File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax exempt interest (see the instructions for box 8).
  • At least $600 in:
  1. Rents (box 1)
  2. Prizes and awards (box 3)
  3. Other income payments (box 3)
  4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3)
  5. Any fishing boat proceeds (box 5)
  6. Medical and health care payments (box 6)
  7. Crop insurance proceeds (box 9)
  8. Payments to an attorney (box 10)
  9. Section 409A deferrals (box 12)
  10. Nonqualified deferred compensation (box 12)

 

The 1099-NEC Form should be used for:

Anyone and everyone that is not an employee and provided services.

Including:

Independent Contractors: Subcontractors, Website Gurus, Marketing Services, Coaches, Consultants, Photographers, Janitorial Services, Repairs and Maintenance

Professional Services: Attorneys and Accounting Services

Commissions to Non-Employees

Exceptions:

Paid under $600 in 2020

W-9 states they are a corporation or LLC taxed as a corporation.

Link HERE