1099-NEC
In 2020, taxpayers will be required to report nonemployee compensation on Form 1099-NEC. In years past, this would have been reported on Form 1099-MISC. Starting this year, all nonemployee compensation paid during 2020 will need to be reported on 1099-NEC forms with the same due date of February 1, 2021.
There are four conditions that must be met to file a 1099-NEC:
- The payment was made for services in the course of your business
- The payment was made to a nonemployee
- The payment was made to an individual, partnership, or estate
- Payments made to the payee total $600 or more in the year
An example of payments to be reported on form 1099-NEC includes independent contractor fees.
A form 1099-NEC must also be filed for anyone whom you withheld federal income tax, even if it was less than $600, and any sales to a person that total $5,000 or more of consumer products.
1099-MISC
Form 1099-MISC is still going to be in use for this tax year, it is just no longer used for items like independent contractor fees.
Uses for form 1099-MISC:
- At least $10 in royalties
- At least $600 in
- Rents
- Prizes and Awards
- Other income that does not fall under any other categories
- Medical and health care payments
- Payments to an attorney