New Form 1099 - NEC
December 22, 2020
The IRS as announced the new form called the 1099-NEC to report independent non-employee compensation. Originally, the 1099-MISC was used for reporting these independent contractor payments, however, it created confusion and underserved penalty notices for many filers. As a result, the IRS is not requiring this new nonemployee compensation from other variables and divisions. This new form was originally put in place by the Reagan administration that lasted until 1982 will also impose a filing deadline of February 1, 2021.
For some, you may still be required to fill out both the 1099-NEC and the 1099-MISC. The 1099-NEC is only used to report payments to independent contractors of more than $600 for trade and business relations. The 1099-MISC is required for rent, healthcare, and royalty payments. The deadline for the 1099-MISC is March 31, 2021.
Some examples of firms that would 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
At Cambaliza McGee LLP, we recommend preparing for the filing season as soon as possible. It is not too early to familiarize yourself with the change in forms, as well as update any software on the new form. If you have any questions about the new 1099-NEC form or need help with any other accounting lease forms, give us a call today (949) 484-8288.
Author: CM Editorial