What is the difference between 1099-MISC and 1099-NEC?

Form 1099-NEC was drafted specifically to report non-employee 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 the IRS, any combination of the following four conditions qualifies as reportable non-employee compensation:

• Payments made to someone who is not your employee. 

• Payments made for services in the course of your trade or business. 

• Payments are made to an individual, partnership, estate, or, in some cases, a corporation.

• 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 in the name of 1099-NEC.

Every business employing independent contractors should check out TaxBandits, an IRS-certified e-filing service provider that helps you to e-file these forms to the IRS and distribute recipient copies, respectively.