New Form 1099-NEC Reporting Requirements –
In the past, payments of at least $600 to attorneys, independent contractors, or directors, among others, were required to be reported on Form 1099-MISC. Other payments, such as rents, royalties, and prizes, also were reported on this same form, but in different boxes. For the 2020 tax year, a new form, Form 1099-NEC, is required to be filed for all nonemployee compensation payments. Other payments that are not nonemployee compensation payments will continue to be reported on Form 1099-MISC.
We are notifying you of this change now so you can take the opportunity to properly identify those payments that may require Form 1099-NEC reporting, and ensure you have all the required information on file. To gather the tax information of independent contractors or other noncorporate or legal service providers, you may use Form W-9.
Forms 1099-NEC for the 2020 tax year are required to be filed with the IRS on or before 2/1/21, using either paper or electronic filing procedures. Forms 1099-MISC for the 2020 tax year are required to be filed with the IRS by 3/1/21, if you file on paper, or 3/31/21, if you file electronically. Both forms are required to be provided to recipients (payees) by 2/1/21. (If you are reporting payments in box 8 or 10 of Form 1099-MISC, you have until 2/16/21 to provide that form to recipients.)
If you need assistance or would like to engage our firm to help guide you through the reporting process, please contact us.
Mike and Staff