What is the difference between 1099-MISC and 1099-NEC?
1.5k views | Last modified 1/7/2022 8:05:11 AM EST | Added by TaxBandits Team

Applicable To
94X 1099 W-2 ACA W-4

Until 2019, payers used Form 1099-MISC for reporting income payments made to independent contractors, including royalties, rent, and other non employee compensations.

 At the beginning of 2020, the IRS announced Form 1099-MISC Box 7; nonemployee compensation would be replaced and a separate form would be used to report only the non employee compensations, i.e., 1099-NEC.
This eliminates the ambiguity of having two filing deadlines for the same form.

Let’s see how 1099-MISC is different from 1099-NEC

Form 1099-NEC was drafted to specifically report nonemployee compensation whereas Form 1099-MISC can be used to report other miscellaneous expenses. 

It is important to note that Form 1099-NEC is not a replacement for 1099-MISC. Form 1099-NEC is just replacing the use of 1099-MISC for reporting independent contractor payments. 

According to IRS, any combination of the following four conditions qualify as reportable non-employee compensation:

  1. Payments made to someone who is not your employee. 
  2. Payments made for services in the course of your trade or business. 
  3. Payments made to an individual, partnership, estate, or, in some cases, a corporation.
  4. A Payment of $600 or more for the calendar year.

Note: Due to the removal of box seven from 1099-MISC, the IRS has released the revised version of Form 1099-MISC.

Every business employing independent contractors should check out TaxBandits, an IRS-certified e-filing service provider to e-file and mail these returns to the IRS and recipients respectively. 

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