Form 1099-NEC: Compensation of Nonemployees
What is Form 1099-NEC: Compensation of Nonemployees? Form 1099-NEC is the Internal Revenue Service (IRS) form used by businesses to report payments made to independent contractors, self-employed individuals, sole proprietors and self-employed individuals.
The current form is an updated design of the 1982 form of the same name. Prior to 2020, all non-employee compensation was reported in Box 7 of Form 1099-MISC. Form 1099-NEC was resurrected in 2020 to resolve confusion related to the January 31 and March 31 dual filing deadlines for reporting certain income and compensation on Form 1099-MISC. This dual filing deadline confused many payers.
Form 1099-NEC is one of many 1099 tax forms, including 1099-MISC for miscellaneous income, 1099-INT for interest income and 1099-DIV for dividend and distribution income.
The deadline for payers to complete Form 1099-NEC is January 31. Recipients receive a 1099-NEC if they received more than $600 in nonemployee compensation in a year. Independent contractors, self-employed individuals, sole proprietors and self-employed individuals are examples of “nonemployees” who would receive a 1099-NEC.
Who can file Form 1099-NEC: Nonemployee Compensation?
Companies must complete Form 1099-NEC for any non-employee to whom the company paid $600 or more during the year. This includes fees, commissions, awards or rewards for services rendered by independent contractors, or payments made to an attorney.
The form must also be completed for anyone from whom federal income tax was withheld under the backup withholding rules, regardless of the amount of the payment.
Companies must deliver the 1099-NEC to payees by January 31 of the following year.
