Columbia EDP Blog

The New Form 1099-NEC Summarized

tax imageIn recent years, non-employee compensation was reported in Box 7 of the 1099-MISC form, that box now goes away. Instead, the 1099-NEC form Box 1 will be used to report non-employee compensation only. Other kinds of payments should be reported using the other 1099 forms (1099-MISC, 1099-INT, etc.).

Form 1099-NEC has been re-introduced due to 2015 legislation which changed the due dates for reporting certain data, causing penalties for late filing which can now be avoided by using the different forms. Therefore, 1099-NEC is due the last day of January 2021, while the 1099-MISC form is due the last day of February 2021.

Finally, unlike the 1099-MISC, the 1099-NEC will not be included in the program where the IRS shares 1099 filing data with states.

1099-NEC: Use For

  • Non-Employee Compensation for Independent Contractors of $600 or more
  • Someone who is not an employee, who provided services
  • Can go to an individual, partnership, estate, or corporation
  • Should include payments for services AND payments for parts or materials used to perform the services

Examples: Attorneys, Architects, Accountants, Graphic Designer, Web Developer, IT consultant, freelance writer, non-employee sales commissions, freelance contractors, benefits consultant, and directors' fees.

Filing Due Date: 1/31/2021

1099-MISC: Use For

Royalties, Rents, Prizes and Awards, Other Income Payments, Medical and healthcare payments, etc.

Filing Due Date: 2/28/2021

See IRS Form 1099-MISC and Form 1099-NEC Instructions for more details.

Conclusion:

If Evolution is set-up to process your 1099s, they will use the 1099-NEC form only, since they should all be non-employee compensation. If you need a 1099-MISC for rent, please contact our tax department and they will provide you with instructions on how to send the data. Please note that if EDP is processing some of your 1099s, they will need to process all your 1099s as only one 1096 should be filed with the IRS.

Please contact our Tax Department if you have any questions.

Jim Claus, Tax Manager

Jody Linick is an AIPB Certified Bookkeeper

Posted Date: 2021-01-24

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