Here are a few updates to Form 1099-NEC that you must know for the 2021 tax year.
As the 2021 calendar year comes to an end, the excitement leading to the New Year is at full speed. Businesses find this time of the year to be very crucial as it gives them the necessary time to learn about any new updates or last-minute notices issued by the IRS. in their tax information reporting operations.
As you’d expect from the title, the IRS released a few updates for this year as well, which includes the revised version of Form 1099-NEC.
A new look, a few changes, and minor updates – that is all there is to the revised form.
The following will discuss in detail the new updates and changes made to Form 1099-NEC, and help you understand and even compare the before and the after versions of the form.
So, let’s get to it.
Box #1 is no longer used to report the purchase of fish for resale
According to section 6050R, the IRS states that any cash payments made to purchase fish for the purpose of resale can no longer be reported on Box 1 as a part of non-employee compensations. Instead, such transactions will be reported on Box 2 of Form 1099-NEC.
Box 2 of Form 1099-NEC specifically deals with direct sales made by the payer totaling $5,000 or more of consumer products to the recipient for resale.
Paid preparers and accountants must keep this update in mind when preparing 1099-NEC forms for vendors in the fishing trade.
FATCA filing requirement box – removed
A previous version of IRS Form 1099-NEC required filers to select and report FATCA (Foreign account tax compliance act).
What is FATCA in Form 1099-NEC?
When taxpayers within the U.S. hold assets worth $50,000 or more overseas, the IRS requires such taxpayers to disclose the asset value through FATCA filing and pay the taxes on those assets per the applicable compliant sections.
However, the recent developments are indicative that taxpayers do not have to worry about reporting FATCA or foreign asset taxes on Form 1099-NEC.
IRS Form 1099 RESIZED
Since its re-introduction in the 2020 tax year, Form 1099-NEC has undergone a variety of changes. Apart from the changes specified above, Form 1099-NEC has also been re-sized to help filers print all copies of Form 1099-NEC on a single sheet.
Form 1099-NEC: Before the Update
Take a look at IRS Form 1099-NEC after its re-introduction in the 2020 tax year.
Revised Form 1099-NEC For 2021 Tax Year
Take a look at the revised version of IRS Form 1099-NEC in the 2021 tax year.
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