What is Form 1099-NEC?
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Last modified 7/16/2020 9:16:29 AM EST |
Added by TaxBandits Team
As we all know, Form 1099-MISC is used for reporting the payments made to the independent contractors, including royalties, rent, and more. This is how the form was filed before 2020. At the beginning of 2020, IRS announced that the Form 1099-MISC Box 7, NonEmployee Compensation will be considered a new separate form to report only the NonEmployee Compensation.
But, Form 1099-NEC is not a new form if we look back before 38 years. At that time, Form 1099-NEC was there to file this compensation, because of the deadline confusions it was merged with Form 1099-MISC. It is again making a comeback, and a few days back, IRS has released the final version of Form 1099-NEC.
Form 1099-MISC overview:
It is important to know what Form 1099-MISC is, to know about the Form 1099-NEC. It is a business tax return used for reporting payments to independent contractors.
If you have paid $600 or more to the contractor, you are supposed to file Form 1099-MISC and send it to the IRS and contractor. Usually, the payments reported in the form include rent, royalties, medical care payments, crop insurance, fishing boat expenses, substitute payments, gross paid to an attorney.
Form 1099-NEC is a separate form to report NonEmployee Compensation, which was previously reported in the Form 1099-MISC Box 7. This form is only for filing the NonEmployee Compensation, and the rest of the other payments can be reported in Form 1099-MISC as usual.