Here’s a simple guide to help you understand the basics of Form 1099-NEC, its uses, reporting requirements, and deadlines.
If you’re a business owner, you just know how important Form 1099-NEC is. Since its re-introduction, Form 1099-NEC has become one of the fastest incorporated information returns of all time. This is due to the simplicity that the form brings to 1099 reporting, and subtracting the complexity of 1099-MISC by a major chunk.
Form 1099-NEC majorly deals with non-employee compensations, which were previously reported on Form 1099-MISC.
It enables employers to report all compensations paid to independent contractors, vendors, freelancers, and gig workers.
However, the reporting requirements for 1099-NEC instruct filers to report the non-employee compensations only if the amount paid to the contractor is $600 or more in a tax year.
The following will give you an in-depth perspective of Form 1099-NEC and its filing requirements.
So, let’s get started.
What Is Form 1099-NEC?
Form 1099-NEC is an IRS information return in the 1099 series. It is used to report any and all non-employee compensations paid to independent contractors in a tax year.
If you’ve paid $600 or more to an independent contractor in the course of business, then you must report such a transaction on Form 1099-NEC along with the payee’s TIN and legal name.
Why Do You Need To Report With Form 1099-NEC? / What Are Its Uses?
Form 1099-NEC has 3 fundamental purposes.
- Form 1099-NEC allows the IRS to cross-verify the payments reported and declared by the payer and the incomes reported and declared by the payee. The mandatory TIN and legal name reporting for the 1099-NEC form indicates that the cross-verification of payments and incomes is a major theme for Form 1099-NEC.
- Form 1099-NEC has been re-introduced by the IRS intending to resolve the loopholes of Form 1099-MISC. Non-employee compensation reporting reduces the scope for malpractices within certain industries that misclassify the compensations paid to the employees as independent contractor payments. The re-introduction of Form 1099-NEC leaves no room for corrupt tax reporting practices.
3. Form 1099-NEC simplifies the complex tax reporting for 1099-MISC. Previously, Form 1099-MISC was used to report miscellaneous income and non-employee compensations. However, with Form 1099-NEC coming into the picture, Form 1099-MISC is now only used to report miscellaneous information, such as rent, royalty, and crop insurance proceeds.
How To Report With Form 1099-NEC?
Form 1099-NEC is relatively easy to work with. Taxpayers need the vendor’s TIN, legal name, and transaction data in order to report with this information return.
The following guides will help you report your non-employee compensations using 1099-NEC forms in accordance with the latest updates of the IRS.
- New Updates To Form 1099-NEC For 2021-22 Tax Year
- A Comprehensive Guide To Reporting Non-Employee Compensations
- Form 1099-NEC Is Added To CF/SF Program: All The Details
- State-Wise Reporting Requirements For Form 1099-NEC
- How To Read Form 1099-NEC: A Beginner’s Guide
When Is Form 1099-NEC Due / What Is Form 1099-NEC Deadline?
Use the following due date timetable to schedule your 1099-NEC form eFilig.
|Filing Type||Due Date|
|Recipient Copy||Jan 31, 2022|
|IRS eFile||Jan 31, 2022|
|IRS Paper Filing||Jan 31, 2022|
Where To File Form 1099-NEC Online?
We recommend using Tax1099 to report and eFile Form 1099-NEC for a smoother and faster experience.
100,000+ businesses like you trust Tax1099 and retain our solutions for every filing season. Tax1099 offers convenience, speed, and reliability – all in one place.
Your 1099 reporting experiences are enriched with real-time TIN matching, dynamic automatic tax calculations, and other productivity functionalities.
Use the following 3-step guide to report and eFile your 1099-NEC forms online. However, to get started, you need to create a free Tax1099 account. Sign up here.
Step 1: Import your tax-sensitized data to Tax1099 using any of the integrations available in the Tax1099 widget and enable Tax1099 to populate the data across the 1099-NEC forms.
Note that you have to file Form 1099-NEC for each independent contractor to whom you’ve paid at least $600 or more in a tax year.
Step 2: Validate your reports. Use tools like Tax1099’s real-time TIN matching to search 100,000+ TINs in a minute. Get results in 30 seconds or less.
Step 3: eFile your validated forms to the IRS securely. You can choose to schedule your submissions with Tax1099’s eSchedule tool. Alternatively, we will automatically schedule your validated eFiles for submission at least a week before the IRS due date.