{"id":2556,"date":"2021-01-14T03:47:06","date_gmt":"2021-01-14T11:47:06","guid":{"rendered":"https:\/\/www.aiminsight.com\/blog\/?p=2556"},"modified":"2021-01-14T04:16:27","modified_gmt":"2021-01-14T12:16:27","slug":"1099-nec-and-1099-misc","status":"publish","type":"post","link":"https:\/\/www.aiminsight.com\/blog\/uncategorized\/1099-nec-and-1099-misc\/","title":{"rendered":"1099-NEC and 1099-MISC"},"content":{"rendered":"\n<p>From the 2020 tax year moving forward, there is a new change in how business owners and tax specialists work on specific tax reporting types. 1099-MISC replaced by 2020 Form 1099-NEC for reporting Box 7-nonemployee compensation, replacing the old Form to report all other compensation.<\/p>\n\n\n\n<p>See below some guidelines on how to use the Forms and the difference of each Form correctly.<\/p>\n\n\n\n<p><strong>What is 1099-NEC?<\/strong><\/p>\n\n\n\n<p>NEC stands for Non-Employee Compensation. The 1099-NEC is from an old form being used since 1982. IRS improved it to save time and to address administrative issues. 1099-NEC completely classifies specific data from Box 7 of the 1099-MISC, on top of wavering due dates filing.<\/p>\n\n\n\n<p>In using the new Form, you need to understand who is considered a nonemployee compensation. These are the payments to nonemployees (independent contractors, freelancers, vendors, consultants, and other self-employed individuals &#8211; usually known as 1099 workers). This appeared before in 1099-MISC box 7.<\/p>\n\n\n\n<p>As per IRS, a combination of these four conditions identifies which payment to report in Box 1 of the 1099-NEC:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>For a nonemployee<\/li><li>For services in the field of your trade or business<\/li><li>For an individual, partnership, estate, or, in some cases, a corporation<\/li><li>With a pay of $600 or more for the calendar year<\/li><\/ul>\n\n\n\n<p>Be aware: You must also file Form 1099-NEC (report in box 4) for those you withheld federal income tax following the backup withholding rules, despite the amount.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.aiminsight.com\/blog\/wp-content\/uploads\/2021\/01\/payers-information-1024x638.jpg\" alt=\"\" class=\"wp-image-2558\" width=\"580\" height=\"361\"\/><\/figure>\n\n\n\n<p><strong>Useful Tips with the 1099-NEC<\/strong><\/p>\n\n\n\n<p>For an easy process with the new 1099-NEC, see these dos and don ts:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Confirm that the taxpayer ID is accurate. You need to have Form W-9 with the current taxpayer ID before completing Form 1099-NEC.<\/li><li>Send to recipients by January 31st (Feb. 1 for 2021 because Jan. 31 happens to be a Sunday) <\/li><li>File to IRS by Jan. 31 (Feb. 1 in 2021) by electronic or paper filing.<\/li><li>Reporting personal payments does not use Form 1099-NEC <\/li><li>Reporting employee wages uses Form W-2 instead; don\u2019t use Form 1099-NEC<\/li><\/ul>\n\n\n\n<p><strong>What&#8217;s in it for 1099-MISC<\/strong><\/p>\n\n\n\n<p>Nonemployee compensation reporting is eliminated from Form 1099-MISC for the 2021 tax period and moving forward. <\/p>\n\n\n\n<p>The IRS revised Form 1099-MISC.<\/p>\n\n\n\n<p>The most significant shift is in Box 7. If the payer made direct sales of $5,000 or more, Box 7 should be checked off.<br><br>Added reporting has been completed in these fields:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>For crop insurance goes to Box 9<\/li><li>Gross proceeds to an attorney (not fees) in Box 10<\/li><li>Section 409A deferrals in Box 12<\/li><li>Nonqualified deferred compensation income in Box 14<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.aiminsight.com\/blog\/wp-content\/uploads\/2021\/01\/payers-information2-1024x573.jpg\" alt=\"\" class=\"wp-image-2560\"\/><\/figure>\n\n\n\n<p>For Form 1099-MISC, the recipients&#8217; distribution date is also Jan. 31 (Feb. 1 in 2021), but the IRS filing deadlines are different: Feb. 28 if paper filing (Mar. 1 in 2021) and Mar. 31 if filing electronically.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From the 2020 tax year moving forward, there is a new change in how business owners and tax specialists work on specific tax reporting types. 1099-MISC replaced by 2020 Form 1099-NEC for reporting Box 7-nonemployee compensation, replacing the&#8230; <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-2556","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/posts\/2556","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/comments?post=2556"}],"version-history":[{"count":4,"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/posts\/2556\/revisions"}],"predecessor-version":[{"id":2565,"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/posts\/2556\/revisions\/2565"}],"wp:attachment":[{"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/media?parent=2556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/categories?post=2556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aiminsight.com\/blog\/wp-json\/wp\/v2\/tags?post=2556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}