We know that it can be difficult to prepare Form 1099-NEC, but we are here to help simplify things!
Before you prepare your forms 1099-NEC, you will need to gather the tax information for the business or payer and recipient or payee, as well as the amounts paid to the recipient.
What’s New for 2020?
The PATH Act, P.L. 114-113, Div. Q, sec. 201, accelerated the due date for filing Form 1099 that includes nonemployee compensation (NEC) from February 28 to January 31 and eliminated the automatic 30-day extension for forms that include NEC. Beginning with tax year 2020, use Form 1099-NEC to report nonemployee compensation.
Gather Information to Prepare Form 1099-NEC
A. Business Information
You will need to include the following information on each 1099-MISC form you prepare.
- Federal Employer ID Number
- Business Name
- Business Address
B. Recipient’s Information
Before completing a 1099-NEC form for any non-employee, have them fill out a W-9 form. A W-9 form, like W-4s for employees, will provide you with the relevant information for the recipient such as their name, address, and tax identification number.
C. Payment Amounts
File Form 1099-NEC, Nonemployee Compensation (NEC), for each person in the course of your business to whom you have paid the following during the year:
- At least $600 in:
– 1.Services performed by someone who is not your employee (including parts and materials) (box 1);
– 2.Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 1); or
– 3.Payments to an attorney (box 1). (See Payments to attorneys, later.)
- You must also file Form 1099-NEC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.
Be sure to report each payment in the proper box because the IRS uses this information to determine whether the recipient has properly reported the payment.
Need more information?
For more information on filing Forms 1099-NEC, please see our other blog posts:
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BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.