It’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.”
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:
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:
- Rents (box 1)
- Prizes and awards (box 3)
- Other income payments (box 3)
- Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3)
- Any fishing boat proceeds (box 5)
- Medical and health care payments (box 6)
- Crop insurance proceeds (box 9)
- Payments to an attorney (box 10)
- Section 409A deferrals (box 12)
- Nonqualified deferred compensation (box 12)
The 1099-NEC Form should be used for:
Anyone and everyone that is not an employee and provided services.
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
Paid under $600 in 2020
W-9 states they are a corporation or LLC taxed as a corporation.