2021 Tax Season- Form 1099- NEC

Last year the IRS released Form 1099-NEC for businesses to report non-employee compensation of $600 or more, and the same rules will apply for the 2021 tax season.

Trade or businesses must file a 1099-NEC to report any non-employee service provider who received a compensation value of $600 or more. The definition of compensation includes benefits, commissions, prizes, awards, and fees.

Examples of firms that need to file a 1099-NEC include

• A firm that hires an attorney for a lawsuit
• A small office that hires an accountant to help with office finance
• A company that hires an architect to undergo internal projects
• A business that hires a food delivery service or rideshare service as independent contractors

Each payee that received compensation of more than $600 must receive a Form 1099-NEC. For the 2021 tax year, Form 1099-NEC is due to both the IRS and recipients on Jan. 31, 2022.  According to IRS draft instruction for form 8809, filing extensions for 1099-NEC is permitted but only under circumstances.

Our team can answer your questions regarding the Form-1099 NEC and other important tax issues. Reach out to us today to discuss your tax situation and how we can help you prepare for your tax deadlines.