What are the differences between Form 1099-NEC and Form 1099-MISC?
Before 2020, businesses owners used Form 1099-MISC to report nonemployee compensation and other types of payments. However, in 2020, Form 1099-NEC made a return after more than 30 years!
If you are a business owner that pays contractors or vendors, you are probably quite familiar with filling 1099 forms. However, now that 1099-NEC has been reintroduced, it’s important you understand the differences between Form 1099-NEC and 1099-MISC so that you can fill out, distribute, and file the correct form.
123PayStubs supports e-filing for both Form 1099-NEC and 1099-MISC. With 123PayStubs you can quickly and securely file your returns! Below, we will discuss Forms 1099-NEC and 1099-MISC and how they differ. Continue reading to learn more about which form you need to file:
Form 1099-NEC
IRS Form 1099-NEC is used to report payments ($600 or more) made to nonemployees. Previously, this was reported on box 7 of Form 1099-MISC. Now, the IRS has separated the reporting for nonemployee compensation by reintroduction Form 1099-NEC for the 2020 tax year.
Who is responsible for filing Form 1099-NEC?
The IRS requires businesses/individuals to complete a Form 1099-NEC for any nonemployee person to whom they paid $600 or more during the year. The following conditions also apply:
- Made payments to individuals who are not on your payroll
- Paid an individual, estate, partnership, or corporation
- Made payments for services related to your trade or business
When is Form 1099-NEC due?
Form 1099-NEC is due by January 31, 2022. Businesses should provide Form 1099-NEC to recipients by January 31, of the following year.
What information is required to file Form 1099-NEC online?
- Payer Details: name, TIN, and address
- Recipient Details: name, TIN, and address
- Nonemployee Compensation
- Federal Income Tax Withheld
- Federal details: miscellaneous incomes and federal tax withheld
- State Filing Details: state income, payer state number, and state tax withheld
Form 1099-MISC
IRS Form 1099-MISC is an IRS tax form used to report the miscellaneous payments made to other self-employed people during the calendar year. Form 1099-MISC is also used to report payments made for rent, fishing boat proceeds, medical and health care payments, prized, awards, and more.
Who is responsible for filing Form 1099-MISC?
You must file Form 1099-MISC for each person you give the following types of payments to during the tax year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- At least $600 in the following
- Rents
- Prizes and awards
- Other income payments
- Medical and health care payments
- Payments to an attorney
- Crop insurance process
- Cash paid from a notional principal contract to an individual, partnership, or estate
- Any fishing boat proceeds
- Section 409A deferrals
- Nonqualified deferred compensation
You should also use Form 1099-MISC to report payments made for direct sales of more than $5,000 of consumer products for resale anywhere other than a permanent retail establishment.
When is Form 1099-MISC due?
Recipient copies of Form 1099-MISC are due by January 31, 2022. The electronic filing deadline is March 31, 2022.
What information is required to file Form 1099-MISC online?
- Payer Details: name, EIN, and address
- Recipient Details: name, EIN/Social Security, and address
- Federal Details: Miscellaneous incomes and federal tax withheld
- State Filing Details: State income, payer state number, and state tax withholding
Copies of Form 1099 NEC/MISC
If you are filing Form 1099 NEC or 1099 MISC, you will need to send copies of the Forms to various places. Fortunately, the copies for Form 1099 NEC/MISC go to the same places.
- Copy A: The IRS
- Copy 1: State tax department, if applicable
- Copy B: Recipient (independent contractor or vendor)
- Copy 2: Recipient (independent contractor or vendor)
- Copy C: Keep in your business record
123PayStubs
123PayStubs is here to help you meet these annual filing requirements quickly and easily! When you file with 123PayStubs you can receive instant notifications on your returns filing status, auto-generated Form 1096, and we will send recipient copies on your behalf.
